How buy here pay here works
Instead of arranging a bank loan, the dealer is the lender. Payments are often weekly or every two weeks, and sometimes must be made in person. Because the dealer takes on high-risk borrowers, prices and interest rates tend to be high.
The main risks
- High interest rates, often near the maximum your state allows
- Higher prices for older, high-mileage cars
- GPS trackers or starter-interrupt devices that can disable the car if you pay late
- Fast repossession, sometimes after one late payment
- No credit building if the dealer does not report your on-time payments to credit bureaus
Questions to ask before you sign
- What is the total price, the APR and the total I will pay over the loan?
- Do you report payments to all three credit bureaus?
- Is there a warranty? What does the Buyers Guide say?
- Does the car have a GPS tracker or starter-interrupt device?
- What happens if a payment is a few days late?
- Can I take the car to my own mechanic for an inspection first?
Better options with bad credit
- Credit unions and CDFIs often approve members with limited credit at fair rates.
- Nonprofit lenders like Ways to Work and On the Road Lending (see affordable cars and loans).
- Nonprofit car programs in your state.
- A larger down payment from savings or a matched savings (IDA) program.
Frequently asked questions
Are buy here pay here dealers illegal?
No. They are legal, but they must follow state lending, disclosure and repossession laws. Read every document and ask for copies.
Will BHPH help my credit?
Only if the dealer reports your payments to the credit bureaus. Many do not, so ask before you sign.
Related help
Find help in your state
- California
- Texas
- Florida
- New York
- Pennsylvania
- Ohio
- Georgia
- North Carolina
- Michigan
- Illinois
- All 50 states + DC
Reviewed November 2026. This page was researched using official government and program sources. Programs change often, so please confirm details with each program before applying. How we research.