Legal definitions, such as those used by the California DMV , often characterize a BHPH dealer by two primary criteria:
: As of recent market research, there are roughly 33,000 such lots in the U.S., compared to 22,000 new car dealerships.
: To offset the risk of lending to high-risk borrowers, interest rates are significantly higher, sometimes exceeding 30%. buy here pay here definition
: 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
: They enter into conditional sale or lease contracts that are not paid in full within 30 days. Legal definitions, such as those used by the
: These dealers focus on "subprime" borrowers with poor or no credit history who have been denied by traditional institutions.
: Many lots use GPS tracking or "starter interrupt" devices to facilitate easy repossession if a payment is missed. Market Scale and Impact Core Business Model Characteristics : They enter into
: 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