Illustration by Andy PottsCar and Driver
From the February/March 2021 issue of Car and Driver.
For the roughly 2.6 million Americans who bought vehicles from them in 2019, buy-here, pay-here (BHPH) dealerships are both a lifeline and a scourge. These used-car lots act as both dealer and lender, catering to customers with credit scores below 620, a history of making late payments, or a repossession or bankruptcy in their past.
In exchange for financing these risky customers, BHPH lots charge above-market prices for their vehicles along with interest rates as high as 29.9 percent.
In 2019, BHPH customers defaulted on almost four out of every 10 loans. For the dealers, who can repossess and resell the same vehicle over and over, this is merely a part of doing business. For the hard-up people relying on those cars, though, it’s another snare in the poverty trap. They are left poorer, without transportation, and with another black mark on their credit report.
Kelley Blue Book says a 2012 Chevrolet Cruze with 105,000 miles should sell for roughly $6400 to $8000 at a conventional dealership, yet a BHPH customer could pay more than $20,000 over the life of the loan for the same car. Here’s how one used car can cost two wildly different amounts depending on where it’s purchased.
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