Buy-Here-Pay-Here Loans and the Lemon Law

Many consumers in need of a vehicle turn to buy-here-pay-here loans to finance their purchase. Though these loans may have attractive initial rates and make owning a vehicle a financial possibility, many of the terms and methods that lenders employ for buy-here-pay-here loans are harmful to consumers and may ultimately amount to unwieldy debt.

Many buy-here-pay-here loans have harmfully high interest rates, price gouging, a greater risk of repossession, a poor inventory of vehicles to choose from, and a host of additional problems. Consumers often resort to buy-here-pay-here dealers because of previous credit problems that make securing a lender hard to accomplish, but even if you purchase a vehicle through a buy-here-pay-here financing deal, you still have rights to protect you from predatory lending and other fraudulent abuses.

If you’ve suffered from a buy-here-pay-here loan that has left you in serious debt, with rising interest rates and in danger of having your vehicle repossessed, contact us at the Law Offices of Robert Mobasseri for a free and no strings attached legal consultation. Call our offices at (213) 282-2000 to speak personal with a member of our firm. You can also fill out a free online case evaluation form and one of our lemon law attorneys will contact you further about your legal options. California’s lemon law was enacted to protect consumers from harmful and illegal selling practices, and you are not without rights.

What are buy-here-pay-here loans?

Buy-here-pay-here loans are extended by car dealerships to assist buyers in acquiring a vehicle by credit. Typically, consumers in need of loans or assistance in financing turn to traditional institutions like banks, finance companies, or credit unions. Buy here pay here dealers offer consumers a line of in-house credit, so that consumers are buying at the lot, and paying at the lot. Certain dealer often offer this line of credit to consumers that may have a poor credit history and are unable to find better financing options elsewhere.

There are some advantages to buy-here-pay-here loans—especially for those who have a history of bad credit, foreclosure, bankruptcy, etc. Loans offered by these dealers may have steep terms, but they provide a vehicle to buyers in need of one and who may not have other financing options. However, the downsides to buy-here-pay-here loans usually far outweigh any advantages.

Problems with buy-here-pay-here loans/vehicles

  • Price-gouging is common at buy-here-pay-here lots, meaning that a vehicle may be sold at a price two or three times more than it is worth. Since buy-here-pay-here buyers may not have financial alternatives, sellers capitalize on their need for a vehicle and inflate the value of a vehicle.
  • Financing terms on buy-here-pay-here loans are often outrageously high. Sometimes the interest rate on repaying a loan can be as high as 25%! So when all is said and done, including the high down payment, you may have paid two or three times more than the vehicle is actually worth. .
  • The used cars sold by buy-here-pay-here dealers typically average an odometer reading of 90,000 to 110,000 miles, and the majority of these vehicles come with no warranty. Additionally, many of these vehicles may have had significant prior damage—including frame or flood damage—which significantly impact’s a vehicle’s value and its safety. .
  • Risk of repossession is high and dealers are very strict about payment deadlines. If you happen to miss a payment, even by a day or so, it’s not uncommon for buy-here-pay-here dealers to have installed a GPS or an immobilizer on your vehicle so that it can be easily found and repossessed.
  • What to do if you were sold a bad buy-here-pay-here vehicle?

    Even if you turned to a buy-here-pay-here dealer for a vehicle because your financial options were limited, you are not without rights. California’s lemon law protects consumers from unjust and fraudulent sales and leases, and our firm at the Law Offices of Robert Mobasseri protect the interests of all Californians.

    If you suffered from predatory lending or a bad buy-here-pay-here vehicle and/or transaction, contact us at the Law Offices of Robert Mobasseri at (213) 282-2000 for a free legal consultation. When you’ve been wrong by a dealer, it can seem that you have few options, but our lemon law attorneys are well versed in the law and have extensive experience representing consumers from all case backgrounds. We are eager to assist you. You can also submit a free online case evaluation form through our site and a member of our firm will contact you personally to discuss your case and options.

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    Lemon Law Auto Fraud serves the following California counties: Inyo, Imperial, Kern, Los Angeles, Mono, Orange, Riverside, San Bernardino, San Diego, San Luis Obispo, Santa Barbara, Tulare, and Ventura.

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    Disclaimer: The following Lemon Law and Auto Fraud information has been compiled from various public sources. It is presented online for informational use only, and without warranty as to its accuracy, timeliness, or completeness. This site does not replace any official versions of the information presented, nor does use of this information constitute an attorney-client relationship. It is always recommended that you do not make any decisions about any legal matter without first consulting an attorney to ensure that all of your rights are protected, as well as to find out if your vehicle meets the established Lemon Law or Auto Fraud Criteria for your state.