Trucks sold under the Buy Here Pay Here model involve the dealer acting as the lending entity enabling the buyer to purchase the car, compared to a traditional third party lender such as a bank or credit union. Buyers using this model must follow certain restrictions and guidelines.
A traditional auto lending program involves a neutral third party financier, such as a bank or automaker-affiliated lending entity, allowing an individual to borrow money for the express purchase of buying an automobile. The terms of the lending agreement, such as interest rates and the time frame in which the buyer must repay the lender, are determined by factors such as the buyers credit score and the price of the truck. In a Buy Here Pay Here model, the dealer acts as the lending party directly, which means that they both sell the truck to the buyer and give them the money to complete the transaction.
This type of lending program is typically offered to individuals with poor credit scores and no alternate means for qualifying for a traditional auto loan. The terms of these deals typically involve high interest rates, because the borrower is at high risk of not being able to pay the loan back, and a limited selection of trucks from which to choose.