: To offset the risk of lending to high-risk borrowers, interest rates are significantly higher, sometimes exceeding 30%.
Legal definitions, such as those used by the California DMV , often characterize a BHPH dealer by two primary criteria:
A dealership is a type of used-car seller that acts as both the retailer and the lender, providing in-house financing directly to consumers . Unlike traditional dealerships that send loan applications to third-party banks or credit unions, a BHPH dealer uses its own money to underwrite the loan, meaning the buyer makes payments directly to the car lot. Technical and Legal Definition buy here pay here definition
: They assign (sell) less than 90% of their contracts to third-party lenders within 45 days, effectively keeping the vast majority of loans "on their books". Core Business Model Characteristics
: Approval is often based on proof of residence and income (e.g., pay stubs) rather than a FICO credit score. : To offset the risk of lending to
: According to Autotrader , BHPH dealers are highly motivated because they earn profit twice: first on the sale price markup and second on the loan interest. What Is Buy Here, Pay Here Auto Financing? - Experian
: As of recent market research, there are roughly 33,000 such lots in the U.S., compared to 22,000 new car dealerships. Technical and Legal Definition : They assign (sell)
: These dealers focus on "subprime" borrowers with poor or no credit history who have been denied by traditional institutions.