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In the used car market in the United States and Canada, buy here, pay here, often abbreviated as BHPH, refers to a method of running an automobile dealership in which dealers themselves extend credit to purchasers of automobiles. [1] Typically, purchasers of cars at BHPH dealerships have poor credit history, and loans have high interest rates. [1]
Starting loan balance. Monthly payment. Paid toward principal. Paid toward interest. New loan balance. Month 1. $20,000. $387. $287. $100. $19,713. Month 2. $19,713. $387
For example, if your original $36,000 auto loan came with a 7 percent interest rate, even at just one point lower, you could save $1,012 over 60 months. Your Credit Score Has Improved
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A small number of cars are financed directly by the dealership at "Buy Here Pay Here" dealers, which cater to customers with subprime credit. Buy Here Pay Here financing accounts for 6% of the total financing market. [5] Car financing options in the United Kingdom similarly include car loans, hire purchase, personal contract hires (car leasing ...
The dealer has the option of marking up the interest rate of the contract and retaining a portion of that markup. For example, a bank may give a wholesale money rate of 6.75% and the dealer may give the consumer an interest rate of 7.75%. The bank would then pay the dealer the difference or a portion thereof.
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