How big of a rip off are "Buy here, pay here" car lots?


Back in the 1970’s home interest rates were really high, like 12 %, so often the only way you could sell your house was “on contract”. B/c very few buyers could qualify for a bank loan at 12% interest rates.
So instead the seller provided the financing and kept ownership until the buyer paid it off via monthly payments to the seller.


Because then they wouldn’t make $20,000 on a $5,000 car.

Your question is kind of like saying “Why can’t the burglar not steal stuff?” :wink:


In the late 70’s mortgage interest rates were as high as 18%. I bought my first house in NH in the early 80’s and rates had only dropped to 12%. By early 90’s they dropped to mid single digits.


On the other hand, you were paying 18% on an average price of 40 grand, which is what you’ll pay for a decently nice new car today.

Today in my market, a house costing $270,000 is considered a starter home. You have to be able to get your hands on over a quarter million dollars to get your first home. The housing market wasn’t anywhere close to that insane in the 70’s.


I have heard my parents talk about those rates but can’t imagine what would happen to the economy if they returned. That is what credit cards charge these days.

There is a local bank that is known for dealing with risky borrowers. I think they like it that way as you always see a repoed car at the bank for sale and there are plenty of “Bank owned” for sale signs with their name on it. They will never give you a rate quote if you just call them. They want you to come in and fill out a credit application before they even talk to you. Most of the local banks here are great. Just not this one… I have heard too many horror stories and they sound like a lot of these “buy here, pay here” places.


That is true. People want all the fanciest appliances and such as well. Fine millwork, granite, and the list goes on and on. People have much higher expectations these days… That is part of the problem with why people are in debt. They could have a used car but no, they have to have new.

That being said, these hurricanes may bump used car prices a tad.


Where I live, $270k will get you laminate floors, formica countertops, bottom-end all-electric appliances, and a garage so small that if you actually fill the stalls with cars there’s hardly any room to move between them. All on a 1/8-1/4 acre lot. The granite, fine woodwork, etc, are in the 450k+ houses.

In many instances it makes more sense to buy new. You get lower interest rates, you get more warranty, and with used car prices being utterly insane right now you can actually sometimes get a new car cheaper than the off-lease car if you find the right manufacturer incentives.

And you also know how the car was taken care of in its first 40,000 miles, unlike the lease car which was probably subjected to the absolute minimum level of maintenance required to avoid penalties, and was probably driven like a borrowed car that the driver didn’t care about.


2.2 gHz, dual-core? Faster, not 10 times. I run Linux.

I build my own kernel and some of my other software.


So what development tools and languages do you use to “Build your own software”?

The very High-end Dual core systems in 2007 was the E630 with a Passmark score of 1109.

Todays High-end systems have a passmark score above 28,000. That put’s todays systems over 25 times faster then your dual-core.


Depends on the specific CPU, if you have something like a circa 2005 Athlon X2, and compare to say a Coffee Lake i7 or even a Threadripper. I’d wager money that the newer stuff would be way more than tens times faster.


I did just that , our new Ford Fiesta SE was a lot less than many used vehicles and Mr. Shadow is correct used prices are insane and only going to get worse.


In 76 our first mortgage was 8 1/2% which was about the going rate. The problem wasn’t the rate back then but the down payment. In 75 when I shopped around, the down payment wanted was 50%. By 76 they had lowered it to 25% which we could do. Really though going way back, I think the norm was in the 6% range for houses and 10% for cars. I have counseled people not to get stupid but 2 and 3% is bound to not last and take advantage of it.


Hi. I have been out of the forum since early Monday, so I am late in asking but can you please bring this back to cars? Thanks.


My guess is you have to take it on a case by case basis. My daughter recently bought a used kia from a dealer, my wife kicked in 3k down payment and agreed to cosign the loan. 5.9 interest they said and no ability to prepay. 3.9 at the credit union, and additional payments towards principal accepted. They offered 2.9 principal payments accepted, you can get ripped off anywhere.


Cur local Kia dealer might as well be a buy here, pay here place. They are so slimy. If I ever wanted a Kia I would drive to another town. All they want to talk about is the financing and low payments. They probably wouldn’t want you to pay cash or use other financing.


Our daughter college student wanted the loan to build up her credit rating.


OK as requested, back to cars and away from money management. In 1981 my car loan from the bank was 18%. I laughed at my CPA BIL a few months before that had gotten 17% as a special favor. Guess I got told. Two years later when the rates came down, I went in to get the rate reduced but that’s when I learned about the rule of 78ths. I had pretty much been paying interest for two years and was now into principle. My latest credit union statement was advertising 3.4 for new car loans. I dunno, I kinda got used to 1.9%, but times they are a changin’, so grab what you can when you can. Yeah, you youngin’s out there can maybe learn a thing or two from us seniors who have been there and back.

Still no way I would lease, I don’t think. But when I continue to see these stories of people sinking heavy money into a pile of junk and it sits because they can’t afford to fix it, something to be said about a $200 a month lease on a new car with a warranty. Keep your nose clean for four years and you can start over fresh.


They are in the credit business not the car business. Watch out you will not get any bargain on the cars, nor will you get a competitive rate on the interest. Usually a real rip-off


Arthur Miller wrote about the plight of the people who are forced to buy cars and other merchandise at “Buy Here, Pay Here” establishments in his play “Death of a Salesman”. Willy Loman, the salesman who who was finding it difficult to make ends meet commented “Life is a race to see if you can get something paid off before it’s in the junk yard”.
I think there are different levels of what Willy says. There are those who buy a new car on credit and trade it in immediately after it’s paid off or sometimes before and continue to make payments. There are those who lease a car, and replace it at the end of the lease with another leased car. Finally, there are those with poor credit who are forced to make auto purchases at “Buy Here, Pay Here” lots and have to replace the car with another “Buy Here, Pay Here” car. I really don’t see a big difference.


Yes there is a difference . The people who want to drive new vehicles and those who lease have better credit scores and they can do that . The ones who have to use the BHPH ( buy here pay here ) places have very limited choices because of low credit scores .