Buy Here Pay Here Heavy Equipment: A Guide for Contractors
If you are a contractor who needs heavy equipment for your projects, you may have heard of the term “buy here pay here” or BHPH. This is a financing option that allows you to purchase the equipment you need from the dealer and make payments directly to them, instead of going through a bank or a third-party lender.
BHPH can be a convenient and flexible way to finance your heavy equipment, especially if you have bad credit or no credit history. However, it also comes with some risks and drawbacks that you should be aware of before signing any contract. Here are some of the pros and cons of BHPH heavy equipment financing:
Pros of BHPH Heavy Equipment Financing
- You can get approved quickly and easily, even if you have poor credit or no credit history. BHPH dealers do not rely on your credit score or report to determine your eligibility. They only care about your income and your ability to make the payments.
- You can choose from a wide range of heavy equipment that suits your needs and budget. BHPH dealers usually have a large inventory of new and used equipment, from excavators and bulldozers to cranes and loaders. You can also negotiate the price and terms of the deal with the dealer directly.
- You can build or improve your credit score by making timely payments. BHPH dealers may report your payment history to the credit bureaus, which can help you boost your credit score over time. This can improve your chances of getting better financing options in the future.
Cons of BHPH Heavy Equipment Financing
- You may pay higher interest rates and fees than other financing options. BHPH dealers charge higher interest rates and fees to compensate for the risk of lending to customers with bad credit or no credit history. This means that you may end up paying more for the equipment than its actual value over time.
- You may have less flexibility and protection in case of default or repossession. BHPH dealers may require you to make weekly or biweekly payments, which can be difficult to manage if you have irregular cash flow. They may also have stricter policies on late payments, penalties, and repossession. If you fail to make the payments, the dealer can repossess the equipment without notice or grace period.
- You may have limited warranty and maintenance options. BHPH dealers may not offer any warranty or maintenance services for the equipment you purchase from them. This means that you are responsible for any repairs or maintenance costs that may arise during the term of the contract. You may also have to pay extra for insurance and registration fees.
Conclusion
BHPH heavy equipment financing can be a viable option for contractors who need heavy equipment but have bad credit or no credit history. However, it also comes with some risks and drawbacks that you should consider carefully before signing any contract. Make sure to compare different BHPH dealers and their offers, read the fine print, and ask questions before making a final decision.