When you buy a vehicle at a traditional dealership, your dealer will likely work with a bank, credit union or other lender to finance your car. A buy here pay here dealerships is different in that it offers in-house financing, which means that the dealership itself will provide you with your auto loan. This type of dealership can offer an alternative to conventional car buying for people with bad credit or no credit, but you should know the risks associated with a BHPH loan before you sign your name on the dotted line.

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May not build or repair your credit score. Many BHPH dealers won’t report your on-time payments to the credit bureaus, which could prevent you from improving your credit. Ask your salesperson if they will be reporting to the credit bureaus.

Higher interest rates than other lenders. BHPH dealerships often charge the maximum legal rate of interest in their state, which can make it hard to keep up with your payments.

Typically requires a large down payment. Some BHPH dealers require buyers to put down a high amount up front, which can increase the monthly payment and total cost of the loan.

Potential for costly add-ons, such as warranties and GAP insurance policies. Dealers may try to sell you these extra products, which can add up to a lot more than the value of your vehicle.

BHPH dealers will also typically attempt to sell you additional protections for your car, such as tracking devices and shut-off switches. These can help them repossess your car if you miss payments or fail to make them altogether.