Buy Here Pay Here Car Dealerships
Robert Siegel speaks with Ken Bensinger, business anchorman for the Los Angeles Times, for an amend about a growing blazon of advantageous used-car dealerships accepted as “buy here, pay here” businesses. He explains how these lots now accept gone into the leasing business in a big way.
ROBERT SIEGEL, HOST:
A brace of months ago, we heard on this affairs about the admeasurement of buy here, pay actuality used-car dealerships. Ken Bensinger, of the Los Angeles Times, appear on dealerships that don’t aloof advertise cars; they additionally accomplish the loans to pay for them. They’re generally the alone dealers area bodies with bad acclaim can get a car. Absorption ante are high, repossessions are common, and a distinct acclimated car can be a banknote cow already it’s awash assorted times.
Recently, Bensinger did a aftereffect to that analysis – how buy here, pay actuality dealers handle used-car leasing. And he joins us now from Los Angeles. Welcome aback to the program.
KEN BENSINGER: Acknowledgment for accepting me, Robert.
SIEGEL: And first, what accept you begin about how accepted it is for these dealerships to get into leasing acclimated cars, either in accession to or instead of affairs them?
BENSINGER: It’s a abundant newer business model. It’s apparently alone about bristles or 10 years old in best genitalia of the country, and the numbers aren’t actual specific. But the better aggregation that offers allowance to these dealers told me they accept about 2,500 dealers, I think, operating now. And that’s up about bifold in the aftermost three years.
SIEGEL: Well, from the dealer’s standpoint, what’s in it to charter a car to me? Let’s say I’m a buyer. What’s in it to charter to me as against to advertise it to me?
BENSINGER: Well, dealers array of invented this abstraction of leasing acclimated cars. And I should add that new cars accept been busy for decades, but no one anytime capital to blow acclimated cars until some of these low-end, used-car dealers ample out that by leasing rather than affairs cars, they acquired all kinds of advantages over the consumer.
They begin it was easier to reclaim them. The rules attention assets in defalcation did not administer to these. Rules capping absorption ante in altered states additionally did not apply. And they begin that there was tax advantages on both on accompaniment and federal assets taxes, and sales taxes.
SIEGEL: You mean, the aberration actuality actuality that appellation doesn’t absolutely change hands, and the bulk of the charter is not technically an absorption rate?
BENSINGER: That’s absolutely right. And if you do the algebraic on these leases – there’s no absorption amount declared on the contract. But if you do the math, you’ll see absorption ante about about 35 to 45 percent.
SIEGEL: Thirty-five to 45 percent?
BENSINGER: That’s about right.
SIEGEL: Well, let’s accept that I’m a buyer. I accept no money, no credit, and I appetite to buy a car. Would I accept to accomplish a bottomward payment, typically, to buy – an old Toyota, let’s say?
BENSINGER: To buy an old Toyota, you’d accept to accomplish a bottomward payment. To charter it, you’d accept to accomplish what they ability alarm an alpha fee, or an appliance fee, or a aegis deposit. And the aberration is that that doesn’t go appear your buying of the car. That’s artlessly a fee that the banker can pocket.
SIEGEL: I’ve consistently anticipation that one advantage of leasing – which I accept never done with a new car – is that you charter it during the aeon of the aboriginal years of the car’s life. It’s beneath acceptable to charge big aliment than if you leased, say, a 5-year-old car. The aggregation you’re demography the charter from would be amenable for application it. Is that the case here?
BENSINGER: No. These cars – there’s no guarantees as to their condition. And abounding affairs absolutely crave the chump to advance it themselves, and frequently crave them to do the aliment at the aliment operation endemic by the dealership.
SIEGEL: Well, aggravating to attending at this from the consumer’s standpoint, does the chump who leases – as against to buys – from one of these dealerships, is there any advantage at all?
BENSINGER: Well, the chump who’s admiring to these about is absorbed because it’s accessible to get off the lot with not a lot of up-front money. The bottomward payments tend to be hardly lower than buy here, pay actuality bottomward payments. And so they think, simply, how abundant banknote do I accept in my abridged today, and what can I drive off the lot with?
They anticipate that way because they badly charge a car to get to work. Let’s bethink that this is an industry that looks for bodies who charge a car. They aren’t affluence items; these are accoutrement that are absolutely important for accepting and captivation bottomward a job. The account payments in these leases tend to be the aforementioned or college than in buy here, pay actuality loans. That’s at adverse with new car leasing, area leasing tends to be cheaper on a account basis.
And the affliction allotment is, at the end, you still don’t own the car. You accept to accomplish a huge airship acquittal if you absolutely appetite to own it.
SIEGEL: Ken Bensinger, acknowledgment for talking with us already again.
BENSINGER: It’s been a abundant pleasure.
SIEGEL: That’s business anchorman Ken Bensinger, of the Los Angeles Times.
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Buy Here Pay Here Car Dealerships – buy here pay here car dealerships
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