A pay here buy here (BHPH) automobile dealership is a business model in which the dealer extends a line of credit to an automobile buyer. The credit is paid back over time, making it easy for buyers to make monthly payments. This method is a great way for dealerships to gain additional revenue and maintain a positive customer reputation.

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Most customers at a pay here buy here dealership are ineligible for conventional financing. These individuals rarely have a credit score above 560, so they cannot get a conventional bank loan. In such cases, the buy here pay here route is the only option. However, these loans typically come with higher interest rates and are not extended as long as traditional bank loans.

The buy here pay here industry is heavily regulated to protect consumers. Federal and state laws prohibit unfair or deceptive practices. The truth in lending act and the federal fair and accurate credit transaction act regulate buy here pay here dealerships. There are also rules concerning the use of cars and the privacy and safeguards of the customer.

Buy here pay here dealerships typically charge higher interest rates than traditional used car lots. Some even don’t run credit checks. Because of this, the cars sold at a pay here buy here lot may be more expensive and the interest rate will be higher. However, many auto lenders clearly state the maximum loan amount they will allow, and it’s usually based on the actual value of the car.