Buy Here Pay Here Definition (2026)

: According to Autotrader , BHPH dealers are highly motivated because they earn profit twice: first on the sale price markup and second on the loan interest. What Is Buy Here, Pay Here Auto Financing? - Experian

: They assign (sell) less than 90% of their contracts to third-party lenders within 45 days, effectively keeping the vast majority of loans "on their books". Core Business Model Characteristics

: While traditional loans are typically monthly, BHPH loans often require weekly or bi-weekly payments that match the customer's payday. buy here pay here definition

: Approval is often based on proof of residence and income (e.g., pay stubs) rather than a FICO credit score.

A dealership is a type of used-car seller that acts as both the retailer and the lender, providing in-house financing directly to consumers . Unlike traditional dealerships that send loan applications to third-party banks or credit unions, a BHPH dealer uses its own money to underwrite the loan, meaning the buyer makes payments directly to the car lot. Technical and Legal Definition : According to Autotrader , BHPH dealers are

: These dealers focus on "subprime" borrowers with poor or no credit history who have been denied by traditional institutions.

Academic and economic reviews, such as those featured on Investopedia and Governing , identify several defining traits of this model: : According to Autotrader

Legal definitions, such as those used by the California DMV , often characterize a BHPH dealer by two primary criteria: