“Buy Here” Auto Industry
“Buy Here” Auto Industry
Here at Cleveland Scrap Cars we report news and happenings well beyond simply damaged car removal or selling an old car. We are the premier option when going to scrap a car in Cleveland, Independence or Eastlake. The reasons are many and include the following:
- We provide a quote for a junk car over the phone when selling an old car
- Same-day damaged car removal when you sell a car for cash
- Our vehicle removal and customer service staff is friendly and fast!
- Our quote for a junk car is a cash price, which includes free towing
Our next topic discusses the “buy here—pay here” auto business in the US. Russ Heaps with Auto Trader posted an informational article titled ‘What Is Buy Here Pay Here?’ with the following details: “If you’ve found that every other credit avenue for financing a car is closed to you, a Buy Here Pay Here (BHPH) dealer may be your last resort. Typically, we borrow money for a car through third-party lenders, such as banks, credit unions etc…. BHPH financing means that you arrange the loan and make payments on it at the dealership where you purchased the car; the car dealer is also the finance company.
Because loan decisions are made by the dealer, who wants to sell you a car, approval is nearly guaranteed. If you have steady income, your chances for approval are good. As a high-risk borrower, you can expect a double-digit interest rate. The BHPH dealer might require you to make trips to the dealership to pay in person. Although some will accept payment online or by mail or phone, BHPH usually means physically bringing your payment to the dealership. Rather than settling on a car and then talking financing, a BHPH will 1st qualify the customer before determining how much they’re willing to lend. Finally, the dealer will show the customer which cars are options to buy, and choices will probably be limited.”
Next we review an article by Ken Bensinger in the Los Angeles Times titled ‘A vicious cycle in the used-car business’ which had the following information: “Tiffany Lee wanted a car. But as a single mother of three, bad credit and a $27,000-a-year salary, she couldn’t find a bank or dealership to give her a loan. A friend steered her to Repossess Auto Sales. She put $3,000 down for a 2007 Ford Fusion, agreeing to pay $387 a month for 4 years. The interest rate: 20.7%, nearly triple the national average. Lee fell behind on her payments & filed for bankruptcy; the dealership called and offered to make her loan more affordable. Lee drove back to Repossess Auto. Moments later, employees parked cars tightly around the Ford, blocking it in. There would be no new deal and Lee’s car was being repossessed.
In this fast-growing corner of the auto market, dealers command premium prices for road-worn vehicles. For most of those people, having a car is the only way to stay employed, and they’ll accept almost any terms to get one. BHPH lots sold nearly 2.4 million cars last year and about 1 in 4 buyer’s default. The car can be repossessed and put back on the lot for sale in short order. A new buyer makes a down payment, takes on a high-interest loan and the cycle starts anew. Provided they don’t get wrecked, these recycled vehicles just keep paying dividends. At some dealerships, cars have been sold and resold. They equip cars with hidden GPS devices & ignition blockers to make the repo man’s work easier. Some keep lawyers on staff, filing dozens of lawsuits to recoup unpaid balances & garnish debtors’ wages.”
What happens if the vehicle breaks down and needs a costly repair? An article on autodealermonthly.com titled ‘Three Reasons Customers Stop Paying – What Do You Do When It Happens’ composed by Ben Donnarumma in November 2009 explained: “I learned that people stop paying for their vehicle whenever something major breaks on it or they don’t have enough vested interest (meaning down payment). So, you need to have a plan or a policy in place to handle mechanical breakdowns. Otherwise, you’re sending a truck out to pick up a repo. You can sell service contracts, provide a warranty, finance the maintenance after the fact, or negotiate a side-payment or split with the customer. The important thing is to listen, understand the problem & communicate without a conflict.
Require 10 verifiable personal references for every loan; don’t accept co-workers as references. BHPH customers change jobs frequently. The odds are pretty favorable that somebody on that list is owed money too and they are more than willing to share information with you.”
Who buys junk cars in Northeast Ohio? Cleveland Scrap Cars is where to scrap a car in Cleveland, Mentor or Tremont. Selling an old car begins by calling for a quote for a junk car. The price will typically include complimentary damaged car removal (towing). Regardless of where you scrap a car in Cleveland, they will require the vehicle title and an ID.