So, you’re in the market for a new set of wheels, and you’ve decided to take the buy here pay here route. Smart move! Not only are the cars on the lot usually just as shiny as those at traditional dealerships, but the financing process is often much less headache-inducing. But before you sign on the dotted line, the Buy Here Pay Here will talk about a critical aspect of buy here pay here financing: interest rates.
First things first, let’s clear up a common misconception. Just because a dealership is buy here pay here, it doesn’t mean that the interest rates will be dirt cheap. In fact, the interest rates at buy-here-pay-here dealerships can often be higher than those at traditional dealerships. Why is that?
Well, when you finance a car through a traditional dealership, the interest rate is typically determined by your credit score. The better your credit, the lower the interest rate. But at a buy here pay here dealership, the interest rate is often determined by the dealership itself, and they often cater to customers with subprime credit, thus, they tend to have higher interest rates to account for the added risk.
So, what’s the average interest rate at a buy here pay here dealership? It can vary, but it’s often around 15-20%. That may sound high, but keep in mind that buy here pay here dealerships often approve customers with subprime credit who might not qualify for traditional financing.
But before you start hyperventilating, remember that all hope is not lost. You can still negotiate the interest rate. You can try to negotiate the interest rate with the dealership, and if that doesn’t work, you can look for other options. Like trying to boost your credit score before applying for a loan or even looking into alternative financing options.