Understanding The “Buy Here Pay Here” Car Policies
The number of days available to cancel a “buy here pay here” car purchase depends on both local law and your purchase agreement terms. Some places do not permit cancellation, while in others there may be an official cooling-off period which allows you to do so within certain limits.
Carefully consider all terms of any purchase agreement prior to signing it and ask any pertinent questions regarding cancellation and return policies. If uncertain of its contents, legal advice from a licensed attorney should be sought before signing.
Options for Getting Out of a “Buy Here Pay Here” Contract
If you find yourself struggling to meet the payments of a “buy here pay here” car contract or simply wish to exit for any other reason, there are various solutions you may wish to explore:
- Negotiate With The Dealership: In some instances, negotiating with a dealership to modify your contract terms may be possible. They might agree to reduce your monthly payment, extend its length or allow you to return the car with debt forgiving in exchange for forgiving any associated penalties.
- Refinancing: If your credit has improved since taking out the loan, refinancing with a traditional lender might offer better interest rates or terms than originally agreed to by you.
- Sell Your Car: One option would be to sell the vehicle in order to cover any outstanding loans or balances on loans from dealers, should there be any. If the value is less than what was owed, any difference must be paid directly.
- Voluntary Repossession: If you can no longer afford your payments and no longer wish to keep the car, voluntary repossession may be the solution. Though this will have an adverse impact on your credit score and could still leave a debt unpaid should its sale price fall short of what’s owed on its loan contract.
Before taking any actions, it’s essential that you thoroughly assess all available options and possible ramifications. If unsure, consulting a financial counselor or attorney might provide valuable insight.
Can you get your down payment if you cancel you “Buy Here Pay Here” car?
Cancelling a “buy here pay here” car contract could have an adverse impact on your credit score; its degree depends on a variety of factors.
If you cancel within the agreed upon timeline (if any) and follow all terms of cancellation agreement, this should have minimal repercussions for your credit score. However, should you default on payments and stop making them, this could significantly damage it.
Voluntary repossession, in which you return a vehicle without meeting its terms of loan agreement, can have a similar negative effect on your credit. Your lender could report this act of voluntary repudiation as a negative mark against you on your credit report, potentially staying there for seven years and severely decreasing it.
Before canceling a “buy here pay here” car contract, it’s wise to carefully assess its ramifications and explore all available options. If payments have become difficult for you, contact your lender to see if he/she can work out a payment plan or other solutions to help avoid defaulting.
Here are a few policies typically associated with BHPH car dealerships:
Down Payment: BHPH dealerships may require a significant down payment upfront – often 10%-20% of the car’s purchase price.
Interest Rates: Interest rates on BHPH loans tend to be much higher than the ones offered by traditional lenders, often reaching double digits.
Payment Schedule: BHPH dealerships often require weekly or biweekly payments instead of monthly ones and may even require in-person payments at their locations.
GPS Tracking: Some BHPH dealerships may install GPS tracking devices in the cars they sell to help locate it if a borrower stops paying their payments.
Vehicle Selection: BHPH dealerships typically stock older, high mileage cars that have already changed hands several times.
Non-refundable Deposits: BHPH dealerships often require non-refundable deposits in order to reserve cars for potential buyers, so it is wise to carefully consider your purchase before placing one.
Limited Warranties: BHPH dealerships may provide limited warranties, typically covering only major engine and transmission issues.
Before signing any BHPH contract, it’s essential that you carefully read through its terms and ask any pertinent questions if anything seems unclear to you. Furthermore, make sure the payments fit within your budget as well as exploring any financing opportunities which might be available.
Your contract with a Buy Here Pay Here (BHPH) dealership should reflect this reality; typically though, BHPH dealerships may report your default on a loan when payments cease being made and repossession takes place; in this instance, this mark could remain on your credit report for up to seven years and significantly lower your score.
Cancelling within the allowed timeframe or negotiating an agreement with the dealership may not have a lasting effect on your credit score; however, it’s still wise to carefully read through any contracts before signing them to ensure there won’t be any unintended negative repercussions like leaving negative marks on your report.
Be mindful that not all BHPH dealerships report to credit bureaus; some only report positive payment history while others do not at all. Prior to signing a BHPH contract, ask whether they report to credit bureaus and how they handle delinquent accounts.
Cancelling a “buy here pay here” (BHPH) car contract will depend on its terms and the dealership’s policies.
Some BHPH dealerships may impose a non-refundable deposit or down payment policy, meaning if you cancel or return the car before its completion you may not receive your down payment back. This policy should be disclosed within the contract or discussed prior to purchasing.
However, if the dealership offers a cancellation policy which allows for refund of down payments, then this might be possible. To maximize chances of success in such an instance, it’s essential that you carefully read over and adhere to any procedures associated with cancellation of contracts.
If you are considering canceling a BHPH car contract and would like to know whether or not your down payment can be returned, contact the dealership and inquire as to their policies and procedures. Keep in mind that canceling can have other repercussions such as harming your credit score – before making your decision, be sure to consider all possible scenarios thoroughly.