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Which auto loan advertisements catch your eye first? Probably the ones that promise low monthly payments. This is a marketing strategy used by all types of lenders to influence customers to take hefty loans for long durations and pay interest for that many years. Yes, it might benefit you by not disrupting your monthly budget but on the flip side, the cumulative interest payment does not help either. Thus, the top buy here pay here dealershipencourages their customers to apply for auto loans for short durations. It helps both the dealer and you, the customer.
How do short-duration auto loans benefit you?
The concept of buy here pay here in Greenville, SC revolves around the fact of extending auto loans to bad or no credit score holders. And as per the market norms, such loans carry an interest rate of 24-32% which is higher than what is available at other conventional institutions that only entertain good credit score borrowers. As you can understand, if you drag the loan duration to 5 years, your monthly payments might be low but you will have to pay 28% interest for 5 years. The net cost of buying buy here pay here used cars will thus shoot up.
Instead, a 3-year auto loan will help you to keep that in check. Plus, a shorter auto loan always equates to a lower interest rate and you might be required to pay a rate that lies in the bottom half of the 28% range. Explore short-duration auto loans as you stand to benefit from all corners.
How do such auto loans help dealerships?
In the end, a buy here pay here dealership benefits if you buy a used car, finance it from them, and pay the entire loan amount back with interest. If you default and the dealership takes possession of your car, no one comes out as the winner. Hence, it is less risky for BHPH dealerships to write short-duration auto loans than long ones. They do not want you to go bankrupt and not be able to pay the loan amount due. The entire repossession process is also loss-making for the dealership and a top dealer will always look to approve a loan amount that you can afford.
Short duration loans are smarter
So, do not write off dealerships that do not lure you with low monthly payments to buy their used cars and used trucks in Greenville. In fact, they are actually looking out for both you and themselves by enabling you to pay off your debt fast and thus directly improve your credit score. Budget for your used car, visit a top name. The financial deal you get from such dealers also matters when you buy a BHPH used car.