As your tax return makes its way into your wallet, you may be thinking of using that extra cash to purchase a vehicle. And, when shopping for your next car, you may find yourself at a “Buy Here, Pay Here” auto dealership. These auto dealerships are known as “Buy Here, Pay Here” lots because not only do you purchase the vehicle from the dealer, but it also acts as the financial institution lending you the money to buy the vehicle. While this may seem convenient, you should be aware of the possible downsides to this type of financing:

Higher rates

According to the Consumer Financial Protection Bureau, the interest rates offered through these dealerships are often higher than at credit unions.

More Risk

While credit unions will set limits on the amount they will lend based on the value of the vehicle, these dealerships may not. So, you run the risk that the amount you borrow may actually be more than the vehicle is worth.

May not improve credit scores

Making auto loan payments on time has the potential to improve your credit score. However, since these dealerships are not traditional financial institutions, they may not be reporting your information to the major credit bureaus that compile your credit reports as credit unions will. If you are looking to improve your credit score, FSU Credit Union offers loan programs that can help, such as our OnPace Auto Loan program and the Credit Rebuilder program.

A better alternative – contact your credit union first!

The FSU Credit Union team is ready to help you make good financial decisions when buying your next vehicle. And, even if you have less-than-stellar credit, you can make a smart car-buying choice by following these steps:

  1. Set your budget and get financing first!
    Your credit union can help you develop a plan for how much you want to spend on a vehicle. Then we can assist you with knowing the best rate at which your loan can be approved. Not only will this give you a realistic picture of what your payments will be, you also won’t be “sold” at a higher rate at the dealership. We also can help you calculate how your down payment will affect your monthly payments. Even if you have a troubled credit history or you’re working to rebuild your credit, you still have options available to you, such as our OnPace Auto Loan program.
  2. Determine the vehicle that’s right for you!
    Think about both your short-term and long-term needs, then research different makes and models. There are several helpful websites with auto reviews and information.
  3. Shop the smart way.
    As an FSU Credit Union member, you have access to the free, professional car buying service iDrive Concierge. We also have vehicles available in our credit union-owned inventory.

For more information, visit our Auto Loan webpage, stop by your local FSU Credit Union branch, email us at, or call 850-224-4960. You can also begin the loan approval process online.


*The content provided in this article consists of the opinions and ideas of FSU Credit Union, does not constitute legal or financial advice, and should be used for informational purposes only. Any decisions you make based on the information contained in this article is made in your sole discretion and liability. FSU Credit Union disclaims any damages or liability for decisions you make based on the information provided.

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