What's the Difference Between Buy Here Pay Here and Guaranteed Financing?
Buying a vehicle can be confusing unless you understand the terms that dealers use and what they really mean for your family. Have you ever heard a vehicle dealer promoting their "buy here pay here" financing option? This may sound like a great deal, but what you may not realize is that "buy here pay here" financing doesn't necessarily help your long-term finance goals. However, guaranteed financing assures that no matter your credit challenges, you are guaranteed to receive credit.
There are so many different items that can affect your overall credit score, such as delinquent payments or slow payments in the past, short-term layoffs or other financial challenges. Even a lack of credit or past payments can be held against you in determining your credit score. Until you establish a pattern of paying your bills in a timely fashion, lenders are not sure how much you will be able to pay on a regular basis towards outstanding bills. If you've been turned down at other dealerships due to your lack of credit or because of credit challenges, finding a dealership who offers buy here pay here (BHPH) credit options or guaranteed financing may be your last option for purchasing a vehicle.
Buy Here Pay Here versus Guaranteed Financing
Less-than-perfect credit means you'll likely be paying more for your financing than someone with excellent credit. Why is this? It's simple -- the lender understands that a certain number of people with lower credit scores will likely default on the loan. Offering guaranteed financing or BHPH credit allows dealerships to work with a broader range of customers, while still allowing the dealership to recover their costs for repo of the vehicle should they need to do so. Guaranteed financing is similar in that it takes your entire credit picture into account when making a decision on interest rates, but your payment history is reported to credit bureaus, so you're improving your overall credit score by making your payments on time.
How Guaranteed Financing Works
Dealerships who promote guaranteed financing partner with banks or other financial institutions to offer you the best possible rates so you can build or rebuild your credit. While there are some limits to the types of vehicles and amounts offered, in general, a guaranteed financing deal is just that: guaranteed. Keep in mind that with guaranteed financing, you'll need to be careful to maintain a positive record of payments, because repossession of your vehicle for nonpayment leaves a bad mark on your credit report.
Apply online using our secure loan application, so you'll be ready to select your vehicle when you come see us at Cambridge Truck. Call us today at 1-740-255-5200 to speak with one of our friendly and professional team members or view our inventory online.