Buy Here Pay Here Auto Sales on the Rise

April 22, 2010 - PRLog -- Since the late 2008 collapse of the new vehicle market, the number of cars sold through Buy Here Pay Here (BHPH) dealers has been steadily rising. When credit requirements tightened up, consumers began facing increased difficulty getting approved for auto loans with bad credit. BHPH car lots offer an alternative. Instead of using third party lenders to approve financing as a traditional dealership does, they offer in-house financing -- in other words, they act as the lender. Typically the customer must make his or her payments weekly and in person, and of course the vehicle is subject to repossession if payments are not made.

Since the majority of Buy Here Pay Here (http://www.buyherenpayhere.com) customers have poor credit, the interest rates are quite high -- generally 15-25% -- but they are much more receptive to credit scores below 620, as well as problems such as bankruptcy, repossession, and foreclosure. Interest is usually rolled into the car payment. The frequency and amount of each payment is generally at the forefront of the negotiation process, taking precedence over vehicle selection or interest rate. Buy Here Pay Here is largely synonymous with Your Job is Your Credit (http://www.yourjobisyourcreditcarloans.com) auto sales.

Traditionally, BHPH lots were small and independent, selling older, high mileage vehicles. However, many larger franchised dealerships have been turning to Buy Here Pay Here financing in an effort to get their customers approved for car loans with 600 credit score or less-- customers who might have been approved prior to the credit crunch. Dealers need to sell cars, and they cannot do so if their buyers cannot get approved for financing. An additional draw to traditional dealers is the higher profit margin on BHPH vehicles. Whereas a franchised dealer typically earns a profit margin of slightly more than 30% per vehicle, BHPH vehicles can earn them more than 40%. The fact that BHPH sales have been trending toward the mainstream can be glimpsed in the average value of BHPH vehicles sold -- today more than 30% of Buy Here Pay Here auto sales are for vehicles of $8000 or more, while the average is about $6000.


Total volume of sales is on the rise as well. In 2001, BHPH sales totaled about 1.3 million vehicles. That statistic stayed relatively steady until 2009, when more than 1.8 million BHPH vehicles sold. Based on Q1 sales data, BHPH car sales could exceed 2.3 million in 2010.

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Buy Here 'N Pay Here (http://www.buyherenpayhere.com) is a leader is helping people with bad credit get approved for automotive financing.