Complaint Review: Heritage acceptance Elkhart - Elkhart Select State/Province

Let me explain to you first:  I don't work for a car dealer or auto finance company, but I know how financing works.

1) Buying a vehicle through a BHPH (Buy Here Pay Here) is only done if you can not get financing anywhere else. And even then it really isn't a good idea.

2) BHPH type auto dealerships make their money on the financing. They buy their vehicles for cheap and sell it to you for much more because they are taking on the risk when they issue you financing. The risk is that you will take the vehicle and not make payments. There is an additional risk that you might not maintain the vehicle or even get into an accident and destroy the collateral. That is why a typical BHPH requires a large down payment - it covers their cost of the vehicle (not your cost). If you fail to maintain or destroy the vehicle, you still owe the entire amount due on your loan. The loan does not go away because you destroyed or lost or damaged the vehicle. Once you sign on the line for the loan, you owe all the money per the contract.

3) The vehicles are sold AS IS. Even if they give you some warranty, if you read the warranty you see it doesn't really cover anything at all. It is another way to charge you. The repairs done by these places are subpar at best (bandaid fix).  You are far better off having your own trusted mechanic at a local shop to make repairs to your vehicle than having any sort of warranty by a BHPH (if they actually have one). Do not take it to a shadetree mechanic either. Same issue.

4) The seller of the vehicle is not responsible for maintenance and repairs. The buyer is responsible. For you to expect the seller to continue to maintain the vehicle at the sellers' expense is unreasonable and irrational.

5) Negotiating the purchase of a vehicle is important. The amount you are upside down is determined by A) Sales Price B) Down Payment C) Interest rate and Term D) timely payments. If you fail to negotiate correctly you will be upside down. The amount of negative equity is directly dependant upon those factors. BHPH's rarely negotiate well - because their clientel don't have the ability to get a loan elsewhere and the BHPH dealership knows it. So they stick it to the buyers. This is their business model and anyone buying a BHPH vehicle ought to know it before you go there.  

6) You don't have to fall into that trap for your next vehicle. Get your credit and income in order and get your financing through a credit union. Then go to a legitimate dealership to purchase your vehicle. Or, buy a beater for cash.

7) In the meantime, you will need to work out your situation on the existing loan. Normally in those finance agreements they can take you to court for a judgment and then garnish your wages when you default on the loan. Check your paperwork for specifics. Even without the vehicle the money is still due. That is one of the problems with borrowing the funds to buy a vehicle.

By the way, the reason you are paying 3 times for the loan amount is because of the interest, penalties and fees associated with the cost of borrowing. It has nothing to do with the vehicle cost. You agreed to it the minute you signed for the loan. Read the contract and the disclosures so you know what you agreed to, in writing.