1803 Brighton Pl Pittsburgh, PA 15212 412-315-7986

What Is Buy Here Pay Here

What Is Buy Here Pay Here Title

     Buy Here Pay Here is a used car loan offered directly from the purchasing dealer, typically for those that have poor or no credit at a higher interest rate. The difference between Buy Here Pay Here and special financing for consumers with bad credit is the loan is backed by a dealer as opposed to a bank. Buy Here Pay Here allowed used car dealers to extend financing to those customers that would not have been able to meet regular or even special financing requirements. Buy Here Pay Here was started in the 1970s during the savings and loan crisis. Dealers had to come up with a solution for the fact that credit was more difficult to obtain and vehicle prices were increasing at a rate higher than income. They found a way to supersede the banks by becoming the bank. Auto dealers would finance the loan themselves.  

What Is Buy Here Pay Here Quote

     Buy Here Pay Here opened up vehicle purchasing to those that were unable to obtain credit through regular channels. Whether the consumer had bad credit, no credit or were unable to verify income the dealer could finance the loan. Prior to regulation some used car dealers not bound by finance laws would offer loans without disclosing finance costs and total price or charging exorbitant interest rates. Practices such as these in beginning of Buy Here Pay Here cemented a reputation for dealers that many have found difficult to overcome even to present day. Dealers that offer any type of financing today are bound by financing laws. State finance laws regulate licensing, maximum interest rates, grace periods, fee amounts and more.

     A Buy Here Pay Here customer can expect to have a larger down payment amount than better credit customers. The loan term is usually shorter. Payments are made directly to the selling dealer. In general, any credit situation is accepted including bankruptcy, repossession, divorce. Any financial situation is also accepted like the inability to verify income or residence.

     Well-meaning loved ones may advise consumers to avoid Buy Here Pay Here at all costs but in most cases those loved ones likely have credit and income that can secure them a regular loan. While it should be a last resort, Buy Here Pay Here does fill a need in vehicle sales and auto loans. Credit problems are in most cases temporary and cause by unavoidable financial catastrophes. Those financial problems only compound when a consumer loses the ability to travel to and from work. For some, Buy Here Pay Here is the only way to dig themselves out of trouble and get back on their feet. It can be a life saver to people otherwise unable to get a car loan.

     Any time a large purchase is being made a consumer should consider the program and dealer that works for them. Find the best financing possible by shopping around. If Buy Here Pay Here is the only option, ensure the terms are clear. Always read your contract thoroughly and research the company you are purchasing from.

Content By:The Used Car Store

1803 Brighton Place

Pittsburgh, PA 15212



What Are Sub-Prime Car Loans

In finance, subprime lending (also referred to as near-prime, non-prime, and second-chance lending) means making loans to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks, such as unemployment, divorce, medical emergencies, etc.” Wikipedia.

      The way a bank figures out your likelihood to payback a loan is based on the following: How have you paid other similar accounts? Do you make enough to afford your payment? Are you financially stable?

      In normal lending a bank or lender is able to calculate and minimize the risk of non-payment. A potential loan customer has a credit score indicative of paying other accounts. A customer has income that can be verified and assets. A customer earns enough to present a comfortable payment to income ratio. People that have these characters can have their choice of loan at competitive rates.

      For those that do not meet requirements in those categories, lenders have created a solution… Sub-prime. Sub-prime simply means “less than prime.” Traditionally sub-prime loans are for borrowers having FICO scores below 640. This score range differs incrementally from lender to lender but if your credit score is below 640 you are generally a sub-prime borrower.

Sub-Prime Car Loans Quote

Sub-prime loans are not in and of themselves bad. While financial experts warn about hidden fees, undisclosed costs, exorbitant interest rates and consumers that are quick to take the first offer they receive instead of shopping around, sub-prime loans do fill a need in lending. Most of the pitfalls experts warn about are less about sub-prime lending specifically and more about “predatory lending” since all of the major detractions could happen to anyone in any credit range with a deceptive lender.

      It’s always important to educate yourself when considering a loan, especially for larger amounts like in car loans and mortgages. While it’s not always easy to read the phone book of loan documents, you can ask your lender direct questions about fees and terms until you are satisfied. It’s also necessary to educate yourself about borrowing in general so you know what general practices are. If you don’t know what’s normal how could you possible spot an abnormality?

      Sub-prime lending serves a need. Many people wouldn’t be able to have the security of a vehicle or mortgage without it. It is a legitimate part of the industry that allows otherwise unqualified consumers to secure car loans and mortgages with a little more documentation of financial status and likely a higher interest rate.

      Many times consumers are not irresponsible in general. Everyone wants to pay their bills. People don’t want to go into bankruptcy or foreclosure or have their car repossessed. Most times, a perfectly well intended consumer secures a loan at a time when paying that loan is perfectly feasible. Then tragedy strikes. An expensive break down, job loss, illness or financial catastrophe knocks them off the peg. One unpaid bill becomes another and a downward spiral begins. If you can’t get credit after credit problems arise, how do you prove to lenders that you are now back on your feet and stable enough to repay a loan? It’s a Catch 22 and sub-prime lending is sometimes the only answer.

      Sub-prime loans usually entail more documentation or proof that you have the ability to pay. Instead of using your credit score as an indicator of likely repayment, lenders will use your “stability and ability.” Are you able to pay (based off of your income and loan amount), how long have you been able to pay and how long can a lender predict that you will be able to continue to pay? It will also cost more. A consumer with a good credit score can expect to have their choice of loan structure and rates below 6%. This is reflective of the lender's risk in taking the loan. Good credit customers are more likely to pay and therefore present less risk. Bad credit customers are less likely to pay and present more risk which is why they can expect interest rates in excess of 10%.

      Bad credit car loans are an area where a consumer can make a significant improvement in their credit in a short period of time. While car loans are generally a significant amount, they are still much less and much shorter than mortgages. It presents an opportunity for consumers to prove again that they can pay a specified amount each month for an extended period of time. Since lenders require proof of income and residence, it is likely verified that you have enough disposable income to repay the loan.

      While the sub-prime lending market can be wrought with problems for lenders and consumers, it gives an educated consumer coming off financial problems to improve their situation and get to work while doing it.

Content By:The Used Car Store

1803 Brighton Place

Pittsburgh, PA 15212



Top 10 Credit Myths Hurting Your Score

Top Ten Credit Myths Title

   Maintaining credit isn’t easy. Even complete financial stability does not guarantee that your status will be reflected in your score. An extremely wealthy person with no debt can have a horrible credit score. That’s because scoring models don’t consider your income when deciding your credit worthiness. If that wealthy person does not have different types of credit accounts that are paid on time and reported to the credit bureaus they could even have no score at all. Scoring models determine your credit worthiness on factors including number of accounts, payment of accounts and credit utilization. Bureaus do not publicly report the calculations that determine your score and while experts have over the years made educated guesses on the components behind their models, it is by no means definitive. An obscure system such as this leaves plenty of room for misinformation. Here the top ten myths that could be hurting your score right now.


      A common credit myth is that credit checks damage your score. Holy moly this one’s a whopper. This is one of the most detrimental credit myths. Its foothold on the psyche of credit consumer has prevented multitudes from educating themselves about their credit rating. How can you maintain or improve your credit rating if you’re too afraid to check it? It’s important to understand that there is more than one type of credit pull, because credit is accessed for two different reasons. A “soft pull” is used to simply access information from your report. Soft pulls are used to check your own credit, or when you apply for a job and complete a background check. It’s also the same type of pull that is performed so that credit card companies can pre-approve you for offers. Soft inquires can occur often and even without your express permission. A soft pull has no effect whatsoever on your credit score. That needs said again: A soft pull has no effect whatsoever on your credit score. “Hard pulls” are used when you’re actual taking financial action like applying for a credit card or loan. It’s when a lender is making an actual decision about opening a credit account. Still confused? An easier way to understand the difference between hard and soft pulls is that a soft pull is simply for informational purposes. A hard pull is a pull with intent to actually open a new credit account. But even hard inquires have a very small effect (a few points if any) on your score and are temporary. Additionally, new changes to the scoring system can detect when you're shopping around for a car loan for example. FICO now has a system in place where multiple hard pulls are scored as a single request if made within a 45-day period. They have adjusted the model to account for when consumers are loan shopping. As long as you're not opening multiple accounts in that 45-day window, it will be calculated as a single pull. From myfico.com "FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur."

Top Ten Credit Myths Quote

      Soft pulls have no effect on your score. As a matter of fact, go do that right now if you haven’t… Take your pick. AnnualCreditReport.com is the site managed by the credit bureau to allow you a FREE copy of your credit report once per year as required by federal law but recently a multitude of sites like Credit Karma, Credit Sesame and Credit.com offer free access to your report and score. It’s really, truly free and are loaded with credit tools and recommendations to repair your credit.


     A common credit myth is that there is one score that all creditors use to determine your credit worthiness. There’s your FICO Score which ranges from 300-850, Experian ranges from 330-830, Equifax ranges 300-850, Transunion and the Vantage Score 3.0 which ranges from 300-850. When you get into credit helping sites, many of them have their own scoring system which is based off of the national scoring models but is not exactly the same. Some lenders have custom scoring models based on the type of credit they offer. Different credit holders report to different bureaus. Your score with Equifax can be significantly higher or lower depending on the credit companies you use and which companies report to where. Most lenders use an average of your three Fico scores with Experian, Equifax and Transunion so it’s important to make sure your credit information is correct with all three bureaus.


      It’s true that credit bureaus are governed by the Fair Credit Reporting Act’s (FCRA) rules that limit the time a negative report can remain on your bureau. The confusion comes when understanding the time limit by account type and more importantly when that clock starts ticking.

Regular credit accounts, civil judgements and tax liens can be reported for seven years. Chapter 11 Bankruptcy can report for ten years. One exemption to the seven-year rule is credit transactions involving 150,000 or more and “to items of information added to the file of a consumer on or after the date that is 455 days after September 30, 1996”.

      So the seven-year rule is an actual rule. Most of the confusion for consumers comes in this paragraph of the code “The 7-year period... with respect to any delinquent account that is placed for collection, charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.”

Credit companies will report late payments immediately, but the seven-year clock does not start until the account was delinquent 180 days, so the account will remain on your credit report for seven years and six months since you stopped paying the account.

      The credit bureaus are bound by the rules in the FCRA so if you have an account on your report that isn’t complying with these regulations, you should contact the bureaus and have it corrected.


      Credit scoring models do not consider your income. Credit scores are based off of account reporting to the three credit agencies. While income is a consideration for ability to pay, it’s not an indication of your creditworthiness. Think about it. A person that makes $500,000.00 per year could have plenty of credit and manage it poorly. Just as someone who makes $30,000.00 per year could have plenty of accounts and manage them perfectly. Income is important to lending and many lenders will consider your income when you’re applying for things like a car loan or mortgage but they consider those things during the application process, not from your bureau.


Credit Utilization Chart      In no way shape or form does it help your score to carry a balance and it could cost you big in finance charges that you would have avoided. The confusion likely started with the definition of “carry a balance”. If you think carrying a balance is leaving an unpaid amount on your card to “carry over” to the next billing cycle, then carrying a balance is not good. Actually it’s bad. If you think carrying a balance means using your credit card so that there is activity and paying it off before the cycle bills, then good! You understand that adding debt is never good for your credit. Your “credit utilization” is a hefty part of your score. It accounts for 30% of consideration. Credit utilization is simply the ration between the amount you owe and the amount available to you. For example, if you have 3 credit cards with a 10,000 limit each you have 30,000 in available credit. If you have a 2,000 balance between those three cards your utilization would be 6%. With 0% being a perfect utilization score, you can see that carrying balances as defined above would be detrimental to your credit rating. The confusion likely came from a good place where well intended people confused carrying a balance with using your credit. You want to use your credit. If possible you want to use all of your credit accounts for purchases at least once a month to keep the account active and allow the credit card companies to compete a bill cycle but paying that bill before cycle will allow your utilization ratio to remain low and avoid any interest charges you would accrue by “carrying a balance”.


      Installment loans like used car loans or personal loans are the best way to raise your score. They add another account to your bureau and add to the diversification of your account types. Unlike revolving credit accounts like credit cards, they do not effect utilization. They are so good for your score that paying them off early may actually have a negative effect. Paying it off early closes the account, and all that rich payment reporting each much will be cut short. An open account paid well a much better account type for your credit score. Keep them open and pay on time!


      Most reasonable people know that race does not affect your score but sex and age? While the credit bureaus do retain information like age and sex, they are prohibited by law from considering those factors in any scoring model. The Equal Opportunity Act prevents it. Lending decisions are not allowed to be based in any way on your race, religion, national origin, marital status, age or sex.


      Well they would… If they report it. One would reasonably assume that if they pay a phone, gas, water and electric bill each month that would be reported on their bureau. Many people assume that the bills they are paying each month like utility bills are reported but they would in most cases be wrong. Most utility companies do not report consumer’s regular utility payments. There’s nothing legally stopping them. They could report like any other business that accepts payments. Most utility companies choose not to report and they have their reasons. The moment a utility company begins report payments, they are instantly bound by the FCRA. They must perform investigations when a dispute is initiated as required by the law. They must provide the maximum accuracy of what they’re reporting as required by the law. You could also argue that they don’t have a need to report. When you stop paying your gas bill it won’t be long before a little truck shows up to shut it off. Their services are more of a necessity, and simply the threat of losing the service is enough to get people to pay. Even though they mostly don’t report good accounts, there is a possibility that they will report a delinquent account or one that is closed with money owed.

Credit Myths Quote 2


      Not true! Some credit cards report to one bureau. Others report to all three. Some report detailed payment history and some not so much. If you’re trying to rebuild credit find a card that reports to all three bureaus and includes your payment history. A well paid credit card is great. A well paid credit card that reports to all three bureaus is tremendous for helping your overall average score. It’s easy to find out how each credit card reports. Search for reviews on the card you’re considering. Sites like Credit Karma will have reviews from others who have actually used the card. They report things like their credit score when approved, reporting of the company, limit amounts, customer service and interest rates. Always do your research before opening a new card.


      While the Federal government regulates many actions and policies of the credit bureaus, they are private entities. And they are not non-profit companies. They are privately and publicly held for profit corporations. They look to maximize profits like any other private company. They make money by selling credit information to individuals and lenders and by charging companies to report credit accounts. Creditors have to pay to report your account, which is why a small debt you owe to a local business is much less likely to be reported. Some of the bureaus have minimum account reporting requirements which excludes smaller companies. This is all the more reason it’s important for you to monitor your score. You may pay plenty of people on time and in full but if that company does not report unless you are delinquent, there’s no benefit to your score.




Content By:The Used Car Store

1803 Brighton Place

Pittsburgh, PA 15212




How To Repair Your Credit With An Auto Loan

How To Repair Your Credit With An Auto Loan Title

     With all of the free (like actually free) credit management sites like Credit Karma, Credit.com, Credit Sesame and more, there’s really no excuse to not know where you stand. While your credit situation may be a result of unforeseen and unavoidable financial issues, knowing your situation has become easy. With these sites you can track your score with all three bureaus, manage your credit accounts, fix missing or incorrect information on your report and more importantly learn about credit and how your score is calculated. These sites check your score on a weekly or monthly basis and while inquiries do not have the affect you might think they have, the way these sites pull your credit does not affect your number of recent inquiries at all. What is the fastest way to repair credit? A well paid installment loan like a mortgage or Car Loan.


     An installment loan is simply a loan of any sum that is payable over a set time with a set number of payments. From Credit.com “Mortgages and installment loans tend to be the valuable to your score as they tend to reflect stability.” Installment loans tend to be verified by actual documents such as proof of residence and proof of income as opposed to a credit card which simply uses your credit score. The credit bureaus tend to value these loans higher than other types of credit for just that reason. A “Trade Line” are account records that are provided to the Bureaus. Different types of trade lines indicate that you are more experienced with handling credit and therefore a healthy account mix has a higher impact on your score.

Repair Your Score With An Auto Loan Quote

     Another significant impact of auto loan on your credit score is the fact that car loans tend to be of a higher amount that regular credit cards. For most consumers, an auto loan is one of the larger purchases they make in life. The impact of a large account such as an auto loan improves your credit in another important category, credit balance. The more companies are willing to lend you, the more credit worthy you seem. Having a well-paid car loan not only improves your score tremendously, it will also help you get a better rate and higher approval chances on your next auto loan. Auto lenders look at your credit rating but they also consider how well other auto loans have been paid.

     Once you have the car loan, it is imperative to make your monthly installment payments on time. Even one missed or late payment can set your credit back seriously. If you’re trying to secure a car loan and you have bad credit, you may have to accept a higher interest rate than a good credit customer. The good news is that if you make your payments on time for a few months, you can go to a bank and they will likely be willing to refinance your loan at a more traditional rate.

     Credit scores are not easy, but not impossible to improve quickly. The overall theme the credit bureaus are looking for is stability and stability may take some time to prove. If you can keep your revolving credit payments up to date and pay an installment loan well, you can be on the road to huge jump in score.

Content By: The Used Car Store

1803 Brighton Place

Pittsburgh, PA 15212