Pros and cons of ‘buy here, pay here’ dealerships

Car on buy here, pay here dealership lot


  • Some dealers claim “we finance anyone,” but it may come at a price

  • Other options include applying for approval before you shop


What are “buy here, pay here” dealerships?

“Buy here, pay here” dealerships not only sell cars but effectively act as the bank, too, by providing in-house financing, typically for buyers with bad credit.* Interest rates can be higher than other lending options and customers make car payments directly to the dealership. They’re different from traditional dealerships that request financing from prospective lenders, with customers generally making payments to a third party.†


Pros of “buy here, pay here” dealerships

Bad credit accepted – Many “buy here, pay here” dealers sell and finance vehicles to customers with bad and no credit histories. They often advertise “no credit, no problem” and “no-credit-check auto loans.”

No or little money down – They may offer the potential to buy a car with no money down, or only a small down payment, such as $500 or below.

Simple process – Buying a car and getting financing at the same time, and making payments to the dealership where it was purchased, is straightforward.


Cons of “buy here, pay here” dealerships

Higher interest rates – Interest rates on loans from dealerships offering in-house financing can be much higher than those from banks, credit unions and other lenders, says the Consumer Financial Protection Bureau.

Bigger risk of borrowing more than the vehicle is worth – Banks and other auto lenders normally limit the amount they will lend based on the value of the vehicle, but a “buy here, pay here” dealership that provides credit for a customer’s purchase themselves may not do that, cautions the CFPB. “So you may end up paying thousands of dollars more than its value,” it says.

Loans may not help build credit – Timely payments on an auto loan may help improve your credit score, but “buy here, pay here” dealerships might not report your payments to one or more of the major credit bureaus, Experian, Equifax and TransUnion. Even if you’re keeping good payment habits, your credit report may not see the benefits.

Vehicle tracking devices may be installed – Due to the risk involved in lending to people with poor credit, some dealers will install a device to track the car or prevent it from starting in order to repossess the vehicle if a customer misses a payment.


Shop empowered with preapproval

Where else can you try if you want to buy a car with bad credit? “Don’t be fooled into thinking that you have no choice,” advises the CFPB. “Even if you have poor or no credit, there may be other lenders that are willing to finance your vehicle purchase.”

That includes RoadLoans, the online platform of national auto lender Santander Consumer USA. RoadLoans accepts applications from consumers with a broad range of credit, including bad and no credit, people who have been through credit counselling and repossession, or have a discharged bankruptcy on file.

You can apply from work, home or your mobile device in a just few minutes and get an instant decision. If approved, you’ll receive multiple loan offers tailored to your needs, providing the flexibility to choose the best fit. Preapproval empowers RoadLoans customers to shop with the confidence of a cash buyer, already knowing how much they have to spend, the interest rate and loan duration, so they can focus on negotiating a great deal on a vehicle.


Car buying made easy

Shopping for a reliable car, truck or SUV with RoadLoans is simple, and many customers drive away in their new vehicle the same day they got their financing. Once you’ve selected a loan offer, download your loan packet and take it to the preferred dealer listed inside. Alternatively, use our dealer locator to search for other options. We work with a national network of dealers that are able to show you select models meeting our standards for age, mileage and financing. You can also be sure the vehicles you are shown will have a clean and clear title.

After the vehicle has been purchased, there is a range of convenient payment options for your installment contract, and no prepayment fees, so you’re free to pay off the car early if you wish.

Buying a car with RoadLoans is a seamless process trusted by customers across the credit spectrum, every day. So, if you’re searching for a “buy here, pay here” dealership, look at all your financing options, and consider working with a lender that puts power in the hands of its customers.

Apply for a car loan online.


* “Bad” or “poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press),,, Investopedia, and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by and Santander Consumer USA.

† These statements are informational suggestions only and should not be construed as legal, accounting or professional advice, nor are they intended as a substitute for legal or professional guidance.

RoadLoans is not a credit counselling service and makes no representations about the responsible use of consumer credit.

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