Buy Here, Pay Here

bobst · June 2006

My advice:

Keep driving your fiance's Mercedes until you have enough saved to buy a nice car, like our Accord which cost $20800 OTD.

Then keep that car for a long time, like 8-10 years.

Yeah, I know it feels strange to write a check for $20800, but I think it is the right thing to do.

snakeweasel · June 2006

that $7,000 is taxed so my actual take home pay is about $4,000.

That can't be right, $7K a month after Federal withholding would be about $5,550, add $500 for social security and you should have over $5,000 less any state tax withholding which should only be maybe 2-300.

british_rover · June 2006

You dont know if he contributes to a HSA or 401k though. You also don't know what state he lives in. I wish CT only took 300 bucks a month in state income tax.

snakeweasel · June 2006

True, but he just said it was taxed and not that he had any other withholdings. What is CT's tax rate anyway?

british_rover · June 2006

I didn't do my own taxes this year, first time in a long time I have not, and last year was the first year I worked in CT so I am not sure.

If I were to guess I would say 5% of taxable income.

snakeweasel · June 2006

I looked it up and its a graduated income tax. Starts at 1.5% and goes up to 5%. So even that would make it under $350. Hey but be of good cheer some states are at 8-9%, and the state that I am sure is making a fortune on tourism has one of the highest state income tax.

Anyway this is getting off topic, back to your regually scheduled slugfest.

bls2753 · July 2006

I want to know what kind of education/skills this individual has, to be able to earn $84K a year, at 23 years of age?

bls2753 · July 2006

I notice most of the references here to BHPH lots, pertain to locations in large metropolitan areas. The scale of economy and cost of living in these cities is much greater than that found in smaller locales in middle america. The wages and salaries paid in a large urban area, allow that the cost of new and late model vehicles, is much more congruent with a middle class income. If the mean household income is $60K, than a purchase price of $20K and up on a vehicle, is very doable for most folks. Therefore the typical clientale of the BHPH dealer, is typically going to be from the economically distressed. However, the rising costs of newer vehicles, combined with the general lower cost of living in smaller, middle american cities, allows for the BHPH dealer to be much more mainstream, and less stigmatized, than most posts in this thread reflect.

In many of these areas, a median priced new vehicle, approaches the cost of an average 3 bedroom home. The mean household income is often around $30K per year in such areas. Combine this with the fact that many local banks have been taken over by large regional or national chains, and that many won't make a car loan for less than $8K or so, and you have a definite market for the BHPH dealer.

You would be surprised at the reasonably educated, moderate income individuals, who shop regularly at these dealers.

asafonov · July 2006

In which areas is an average 3 bedroom home approaches 25-30k - the range of a median priced new vehicle? What is your definition of approaching?

deserth8r · July 2006

It is not impossible, I made over 50k a year when I was 19, of course I was working about 80 hrs a week, but that overtime pay was nice.

bls2753 · July 2006

I'm talking lower midwest and south, small rural towns. BHPH is the norm. Maybe the few Doctors, Lawyers, Bankers, can afford new cars, everyone else it's BHPH.

Get out of your upper middle class subdivision and look around.

I'm am an adjunct instructor at a local community college, have a masters degree and make 28K a year. Live quite adequately thank you. I always drive BHPH cars, and I'm not ashamed to admit it. And yes, 30K houses here do exist, and they're not shacks.

sky23213 · July 2006

First I thought you misspoke and you meant the average household income, not average 3 bedroom home. But now you got me curious. Unless you really stress on "home" (vs "house"), what would be a 25K-30K home, and where? Unless that includes mobile homes, which would be a far cry from "an average 3-bedroom home".
Get out of your upper middle class subdivision and look around.
Do it every day, and after reading this thread I vividly remember my first car buying experience from a classic BHPH. Didn't now it was one at the time, but what a stinky outfit...
I don't mean to be mean or anything, but I think you might be a little off in your perception, not the rest of us.

asafonov · July 2006

I'm talking lower midwest and south, small rural towns. BHPH is the norm. Maybe the few Doctors, Lawyers, Bankers, can afford new cars, everyone else it's BHPH.

No argument from me here.

Get out of your upper middle class subdivision and look around.

I live in the city - Saint Paul (though not downtown, hardly anybody lives there.)

I'm am an adjunct instructor at a local community college, have a masters degree and make 28K a year. Live quite adequately thank you. I always drive BHPH cars, and I'm not ashamed to admit it. And yes, 30K houses here do exist, and they're not shacks.

Good for you (but boy, am I glad I chose industry over academia - and primarily because of the tenure treadmill, not money.) And I mostly buy and drive used cars, too - though usually privately, not through BHPH.

30k 3-bedroom houses, though? Please email an ad for one or two privately.

explorerx4 · July 2006

it's pretty much, 'how much did you make?', we'll take 5%.
and don't forget to pay your property taxes too.

explorerx4 · July 2006

what is your specialty do you have your masters in?

cadillacmike · August 2006

That first paragraph if entered into an excel spreadsheet would produce the message "circular reference error". :surprise:

That second para - where are the $25,000.0 3-bedroom homes :confuse: - I'll buy 4 right away if there are any in FL!!!

bls2753 · October 2006

Well maybe 30K houses are not the norm, but overall the cost of living is much lower. But new cars are the same price wherever you live, so their cost represents an overall larger proportion of income in areas where income is lower. I suppose comparing monthly housing expenses to a car payment would be a better barometer. I would guess most new car payments would be $400-500 month unless you have a significant down payment. Which is equal to housing expense in some areas of the country.

Patronage of BHPH dealers is not always a result of bad credit or stupidity. It may be true in large east coast urban areas, but not everywhere.

I will admit with the advent of the internet, finding good used cars at half the price of local BHPH lots is a much better value.

At the end of the day, all car financing is a rip-off no matter where you buy. Buy the most car you can pay cash for.

mac24 · October 2006

At the end of the day, all car financing is a rip-off no matter where you buy.

Even the 0% deals?

isellhondas · October 2006

All car financing is a rip off?

Where do you get this?

Not everybody can afford to pay cash for their cars like you obviously are able to.

qbrozen · October 2006

hell, it doesn't even have to be 0%.
As long as I can borrow money at a lower rate than I make on my investments, why the hell would I take the money out of the investments??

Sometimes its just painfully easy to finance. The loan on our chrysler, for instance, charges less interest than my 7-month old makes on his lousy savings account!

occupant1 · November 2006

I financed my first car when I was still 17. The lot owner figured why not, since I had already bought two cash cars from him and the note wouldn't end until I was 18. $300 down and $50 a week, total of $1300, for a 1975 Torino. I paid it off when I left for school, and he mailed me the title. No problem. Except the car burned to the ground before I got to school. Tires were to blame, I should have changed the front ones before taking a 900 mile trip at 75mph+ through Texas, New Mexico, and Colorado to get to Wyoming. Tough roads.

I financed another car when I got to Wyoming. Parents took me up there and bought me a $300 1980 Caprice to get me by. Caprice overheated badly, still ran, but I couldn't rely on it to deliver pizza. So I put it and $300 down on a 1979 Chrysler LeBaron. Paid it off and traded it for a 1985 Olds Delta 88, cash deal, kept it for awhile.

I financed my next car at a BHPH in Marion, Ohio. 1980 Buick Electra. $300 down, $50 a week, it got me around for a month until the starter locked up and caused a fire under the hood. Dealer took it back, no questions asked, and put me in a 1985 Dodge Charger hatchback. A month later my Dad co-signed a bank note on a nicer car (1993 Dynasty) and I gave the Charger back to the lot. No problem, they didn't care, they'd sell it to someone else. They were working on rewiring the Buick when I dropped the Charger off.

Next BHPH lot I bought from was my wife's Lumina this past February. We're still paying on the car, had to make a couple minor repairs, but it's doing fine. We put $1300 down on it and financed around $3400 on a $3995 car at $75 a week. Pretty decent deal for a clean, reliable, well-kept 8-year old sedan with 118K on it and a dent in the left front fender.

And finally, a couple hours later, two blocks over, I bought a 1997 model Lumina for $4995 and $700 down and $65 a week. I only got it so we'd have two good cars, but this one didn't turn out so good and wouldn't pass inspection. Because of the laws in Texas regarding emissions, the dealer either had to fix it to pass or buy it back. Instead, the dealer conveniently "lost" our last payment check, repossessed the car, and sold it to some other unlucky sucker. No problem. I don't have to worry about that car anymore, and because of their attitude and the quality of the cars on their lot, I'm not buying from that lot again. I even sent a friend to buy a truck from them at one point, and it turned out to be a real pile. They pulled the same trick, edited their computer to no longer show the last payment, repossessed the truck, and left him hanging.

Reminds me...MAKE SURE you get a receipt every time you make a payment. Might help in small claims court. And if it wasn't over a measly $700 down payment and a few biweeklies, I'd be suing that dealer. Much cheaper to just let it go.

I don't want to BHPH finance another car, but we may be stuck doing so when we get a minivan soon. Have kid #6 on the way. Oldest stays with her father, so we have to have 7 seatbelts and the Lumina isn't going to cut it. We're trying to work with the selling dealer to trade up, but they're only offering $600 versus the $1900 we owe, and that's wrong. Hoping to sell the Lumina outright to someone willing to wait while the lien is released from the title. I'm sure we can get $1900 for it at the very least, and start fresh on the minivan, whether it's from the same BHPH lot or not.

Some BHPH lots are horrible. I know of one lot on the south side of town who has GREAT cash prices on their cars. One example would be a car we looked at back in February. Gray 1999 Chevy Lumina, 130K, cash price was $2799. Sounded great and if we could have financed that with half down and that price, we were all for it. But the finance price was $5799!!! They insisted on making an extra $3000 over an 18 month note instead of taking half now and 4 or 5 months at $300 a month. They would have had their money in much less time our way, and there is no reason to mark up a car to double the asking price to allow financing.

And some BHPH lots are great, like the lot we bought my wife's Lumina from. No ridiculously priced sleds, no major mechanical gremlins, and they didn't even check her credit (it's BAD, and mine is even worse!!!). We've been able to pay by cash or check. I do wish they'd offer credit card payments so we could call in our payment like I did with my other BHPH Lumina that got repo'd.

bls2753 · December 2006

"make on my investments"

It's evident that the financial means of most of the posters here, does not allow for a discussion of BHPH lots from a consumers point of view.

bobst · December 2006

Because your investment income is taxed but the interest you pay on a loan is not tax deductible.

qbrozen · December 2006

eh, we just got BRIEFLY sidetracked based on one comment.

qbrozen · December 2006

That's a good point, but just means you need a little spread in the numbers. The rate on both my current vehicles is still well below even a decent money market or savings account rate, even after taking taxes into consideration.

bobst · December 2006

If your interest rate is that low, then you paid too much for your car. You could have bought it cheaper if you had paid cash.

qbrozen · December 2006

I just went back to read my post. I did say "financed," but that wasn't completely true. The Honda is leased. The Pacifica we got during the "employee price for everyone" deal, so it was as cheap as it was going to get. And the prices before and since that event have been higher (i watch the prices paid forums religiously). The Pacifica is just more "creatively" financed. Its sort of a smartbuy thing. And I'm very glad we did it that way because we are probably not keeping it.

confused1096 · March 2007

I've had pretty good luck with the few times I've done business with BH PH places. I'm not counting when I've walked in and bought an older car for cash.
I dealt with one in Marietta, GA called Georgia Motors. They were a bit over-priced if you had to finace, but not insanely so. I called in advance once when I was having some money issues and got them to wait about a week and a half on a payment. They were very pleasant and very open on any issues the cars had. After all a $2000 dollar car WILL have problems. I know this, I'm a good mechanic, just tell me what to expect out of it and I'm okay with that. I'd cheerfully do business with them again if circumstances dictated and we hadn't moved to Louisville.
As a basic rule of thumb: If the finance price is more than double what the car is worth...you may not wanna deal with that particular lot. There are a couple around here that are just horrible...

joel0622 · March 2007

Nothing wrong with a BHPH lot. They do a good business and provide a service to those who need it, and to those who actually don't need it but enjoy doing business that way.

Biggest thing a BHPH guy is looking for is a car that will out run the note, and they never let you get one paid for. When you come in to make your third to last $50 weekly payment they trade you into something else.

I have learned one thing on this web site, allot of people look at things from only there point of view and not from others. What I mean is,

Just because you can pay cash does not mean every one can.

Just because you can afford to keep a $3000 emergency fund in the bank in case of repairs does not mean every one can.

Just because you did not need GAP insurance does not mean every body doesn't

Just because you qualify for a better rate then 19% does not mean every body does

Etc, Etc,

I am not saying any one person in particular, that just seems to be the general theme some times.

occupant1 · March 2007

So since most of these places don't care if you pay for the car, as long as they got their down payment and they got the car back, I'm thinking they're acting as rental agents for beaters!

I figure it this way. You pick out a nice low mileage '99 Taurus, it's $700 down, $75 a week, 78 weeks, total price $4995+ttl+interest, comes to $6400 altogether. You'd be making payments on that car, and say the transmission gives out after a few months. Now you have choices.

One, you can fix the car out of your own pocket ($2000), continue making payments and end up spending $8400 for a $2000 car over the course of the remaining 12 months of payments.

Two, you can have the dealership fix the car (probably with a junkyard transmission) and tack the $2000 onto your payments and you end up spending more like $8700 for the car with the added interest.

Three, you can tell them to stick it, you're only out $1675 thus far, and you take a few hundred and go to another lot and get another car. They don't check your credit, so who cares, right?

That car lot had a lot less than $1675 in the Taurus anyway. If the down payment was $700, that's probably about what they had in it. They can scrap the car and still be way ahead, or drop in another transmission from one of the dozen Tauruses they have sitting out back with various broken parts, and sell it to someone else. Or sell it as a mechanic's special for cash. Or fix it right and sell it with a higher down payment. They've made their money from the down payment, so every payment you make is profit to them.

So those of us (my dear wife) who simply MUST have a newer model car, but don't have any credit worth speaking of, we just head to a BHPH, pick out something she likes, and if it lasts to the end of the note, terrific. If it craps out, no problem, we go find her something else. If we can't make the payments, it gets repossessed, and we save up for another down payment. If the note tries to switch us to another car, we consider it, as if it were another car purchase, which it kinda is.

The key to BHPH *IS* finding a car that will last to the end of the note. My new motto is that "GM cars run bad longer than most cars run at all!" So Aleros and Malibus and Impalas and Grand Ams and Luminas are what we look for.

The second key to BHPH is to get the lowest down payment and weekly payment possible, without getting overcharged for the car itself. Examples:

1996 Lumina, $500dn, $50/wk, asking price $4995
1997 Lumina, $700dn, $65/wk, asking price $3995
1998 Lumina, $1200dn, $75/wk, asking price $3995
1999 Lumina, $1000dn, $75/wk, asking price $5995
2001 Lumins, $1000dn, $75/wk, asking price $8995

If you can handle the down payment, that '98 is the best deal of those four. The '99 is overpriced compared to the '98, and unless the condition of the car is light years better, the '98 is probably fine. The '96 has cheap payments, BUT look at the asking price, a grand more than the '97. That 2001 looks the same as the '99...UNTIL you look at the asking price. And yes, all five of these are cars we looked at before settling on the '97 and '98 models last year.

jlawrence01 · March 2007

I figure it this way. You pick out a nice low mileage '99 Taurus, it's $700 down, $75 a week, 78 weeks, total price $4995+ttl+interest, comes to $6400 altogether. You'd be making payments on that car, and say the transmission gives out after a few months. Now you have choices.

Or you can go to Carmax and pay $8500 for the vehicle.

kyfdx · March 2007

Geez... If I can afford $75/week, I'm just going to lease a new Accord.. :surprise:

geo9 · March 2007

If you have NO cash or credit or are a "credit criminal"
(thanks Terry aka R Royce) the BHPH lots are your only
way to go !

Those BHPH lots in Fl. sure made a ton of $$$$.........
Sell a car that anyone with cash could buy for $2000
to a person with a little cash and/or no credit for
$1000 down and $60 or so a week for a YEAR.........

You figure MOST can't or won't pay after several weeks.
The car gets popped and resold to some other poor sap
for the same deal...................

joel0622 · March 2007

Old saying of "You reap what you sow" comes to mind

scarlett1 · March 2007

Actually this is not how the system works at all. The first place where you are misguided is in what you think the dealer paid for the vehicle. Just because Kelly Blue Book or NADA tells you the "value" of the vehicle does not mean that is what the current market value of the vehicle is or what the dealer has to pay in order to get the vehicle. In most parts of the country your down payment merely covers the cost of t.t.&l on the vehicle. This isn't the 1970's and vehicles don't cost what your granpa paid. You are correct that you can take your repair money and buy at another dealer because they do not check your credit but the BHPH dealer you originally bought from may report to your credit and if you can suffer out what you think to be your cruel and unusual punishment of a car for the contract term that you agreed to, then you might actually be able to get into a better car the next time and take yourself out of this cycle. But I guess in the long run it is all a matter of your personal value system, how you were raised and whether you think everybody owes you something or if you are going to take responisibility for the bills you didn't pay in the first place the got you into this situation.

lemko · March 2008

...exhorbitant payments on a car on which you already hold the title. Here's an article from the Philadelphia newspaper on the evils of getting a car title loan :

http://www.philly.com/philly/classifieds/cars/20080302_ap_paydayloanfoesaimatcar- - titleloans.html

qbrozen · March 2008

Bruce Johnson is trying hard not to lose his 2000 Dodge Neon. He and his wife, Helen, took out an $800 loan from Fast Auto Loans Inc. near Richmond. They've paid three payments , $533 , and still owe more than $900.

Johnson is paying about $40 per month on the principal and about $200 in interest. If he stops, he'll lose the car. If he continues, he'll sink more money into the car than it's worth.

"I'm paying $5,000 for a car that cost me $1,300, and if I get sick and miss a payment or can't make a payment they're going to come take my car away," Johnson, a 67-year-old retired carpenter, said in a telephone interview.

Johnson now wishes he'd just gotten a payday loan. At least then, he says, he would have known what he owed. Either way, he said, legislators need to protect families like his from predatory lenders.

Man, that just burns me up. Here a poor blue collar worker just trying to make ends meet is forced at gunpoint to take a handful of cash and hand over his car keys. When is the government going to step in and stop this victimization?!

Reminds me of the time a banker came to the house and held a knife to my wife's throat while I signed documents to refinance our home. Anyone know a good lawyer that can help me out?

tidester · March 2008

When is the government going to step in and stop this victimization?!

Not to sound unsympathetic, but the numbers in that article just don't add up.

First, the current balance on the loan is greater than the amount borrowed ($900 vs. $800). How is that possible?

Second, the article claims Mr. Johnson is paying $240 per month ($20 principal + $200 interest) but has already made three payments totaling $533 which works out to $177.78 per month. Which is it, $240 per month or $177.78 per month?

Finally, if he's paying $200 interest per month on a loan with a balance of $900 then his monthly percentage rate is about 22%. which adds up to an astonishing 264% annual percentage rate. Even a predatory lending organization is required by law to inform the customer what the APR is along with the total amount that will be paid over the term of the loan. Mr. Johnson had to have been aware when he signed on the dotted line that the total cost of this $800 loan would be over $5,000.

The government should certainly go after predatory lenders. However, I suspect the author of the article botched it and just didn't get her facts straight. And if the 67 year old Mr. Johnson was either completely oblivious to the tems of the contract into which he entered or was unable to coherently convey the facts to the author of the article then perhaps he ought not be driving in the first place.

tidester, host
SUVs and Smart Shopper.

isellhondas · March 2008

Thank you for doing the math I wa about to.

No, this doesn't add up.

It is a sad story and I feel for this guy especially at the age he is.

Still, he put himself in this position either by not paying his bills or making some horrible decisions.

This is when family support is needed. Hopefully this may be available to him.

bolivar · March 2008

In my state it could be a pawn shop loan.

There are restricted to something like 35% PER MONTH interest rates.

mitzij · March 2008

I hope I'm never in a situation where getting a payday loan or mortgaging my car sound like good ideas. :sick:

isellhondas · March 2008

Yeah, me too.

Sometimes it's not the person's fault. A job loss or medical emergency can put a person over the edge.

qbrozen · March 2008

You didn't miss my sarcasm, did you?

blueiedgod · March 2008

Not to sound unsympathetic, but the numbers in that article just don't add up.

I think you missed the sarcasm. He even said at the end that a mortgage broker came over and put a knife to his throat to refinance the house.... (sarcasm)

tidester · March 2008

No, I did not.

tidester, host
SUVs and Smart Shopper

qbrozen · March 2008

I didn't think so.
Just checking.

oldfarmer50 · March 2008

I recently saw an ad on TV that said they would loan anyone $5750 "just because we trust you". In the small print that flashed for a nano second it said the interest rate was 99%.

joel0622 · March 2008

recently saw an ad on TV that said they would loan anyone $5750 "just because we trust you". In the small print that flashed for a nano second it said the interest rate was 99%.

Wow, no one coud ever afford that loan. If they could they would not have to borrow in the first place.

Wonder how they get around state usory limits :confuse:

the_big_al · June 2008

hmmm... well I agree with you "sort of" about throwing money away on a depreciating assest, but...... you need to drive, and it takes about 10k to get a decent reliable vehicle - you could drive a Hyndia Accent however - and so I don't think that spending 10k on a depreciating asset is "throwing it away". I look at it like an appliance. You buy a toaster for $15 dollars use it till it breaks and then buy a new one. You buy a T.V. for 200 bucks, it breaks in a few years and you buy a new one. A car I view almost the same way, although if it breaks I will definately not just run out and buy another - it depends on what breaks and how much I will have to spend to keep it road worthy.

Right now I own a vehicle with 100K on it. By the time it was all said and done I paid about 17K for it. I financed it for 5 years 4 years ago, and paid it off in 3. I think the original price was 16K, but with added interest I think it came to about 17K. These are rough numbers here, I really don't know. Anyway, my point is, I have now put over 75K miles on it in the last 4 years (it had 25K when I bought it). I have had a few things go wrong, but all I think I have only spent about $500 in repairs in the last 4 years and 75K miles. I am about to spend another 1-200 in repairs next week. This is not including oil changes and tires and brakes of course. Anyway, my point is, I plan to drive this vehicle till the wheels practically fall off. I could be theoritcally driving it another 4 or 5 years putting hopefully the total mileage close to 200K. That would be nice. If I can get that much out of the vehicle, I would consider that original 17K money well spent. Sure the vehicle probably won't be worth much more than 1000 by the time I am done with it, but I sure was able get it's worth out of it....

the_big_al · June 2008

Also I might dare say as I don't mean to offend - but if you can save 2K a month, why not save the 10K over the next 5 months to get 10K down payment and pay off the rest of the 5K over the next year? That would certainly start rebuidling your credit.

Or is the 15K car not a Mercedes and therefore you don't want to be seen in that particular car? I mean even the above mentioned Taurus would do you well. It's cheap, reliable, and will help you rebuild credit. It aint a flashy car, or a "cool" car, but what's more important? Looking cool in a borrowed Mercedes or, or having a solid credit history that you worked hard to build?

Buy Here, Pay Here

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