To be frank, most of the people who use buy here, pay here dealers aren’t financially savvy. They’re either inexperienced with credit or have had credit problems that shut them out of traditional auto loans.

As the About.com expert on used cars, I read a lot about buy here, pay here dealers. I think that reading on good and bad business practices will help you identify a good buy here, pay here dealer versus one simply after your money.

The latter is most likely to close up shop and leave you hanging when it comes to your credit or worse, without a car if your used car is repossessed incorrectly.

Tom Hudson, Hudson Cook senior partner and chairman, shared some insights on “Top 10 missteps that could shut down a BHPH dealer.” Hudson is a longtime legal expert in consumer finance law. While his points are addressed to dealers, I’m approaching it from the perspective of a consumer.

Promissory Notes vs. Retail Installment Contracts

A good dealer is going to be able to explain the difference. It’s important you know, too, because there are different laws for each. Our credit expert here at About.com says promissory notes are “a written agreement to pay back a debt in certain payments, at a certain interest rate and by a certain date and time.” A retail installment contract is when the seller assumes the debt and finances the loan. Almost all buy here, pay here dealers are using retail installment contracts. Most traditional dealers use promissory notes.

Cash Lower than Credit

Dealers who are offering a lower cash price could run into regulatory problems. While this works in your favor, it could indicate problems with other parts of the transaction. Also, as strange as it sounds, most buy here, pay here dealers aren’t in the business of selling used cars. They’re in the business of financing used cars, which is a lot more lucrative.

Do you have enough cash to buy a used car? Find an independent dealer or private seller. Avoid a buy here, pay here dealer because prices are usually higher there because it’s customers are more captive.

Dealers with No Experience

Sure, dealers and sales people with franchise dealership experience know how to sell you a car. But do they know how to sell you a buy here, pay here used car? It’s a whole different process. As Hudson points out, they have to understand “servicing, collections, repossession and sale of repossessed vehicles.”

Repossession is going to be very important to you as a buy here, pay here customer. The About.com banking/loans expert has a great primer on what happens when your car gets repossessed. (It’s a must read.) Among the points are the dealer has the right to take your car back, but your rights are also important, especially if you are in the military. Make sure the buy here, pay here dealer explains the conditions under which your car can get repossessed.

Bad Dealer Advertising

Beware the dealer who uses advertising that is too good to be true. Often it’s bought from advertising agencies with little oversight of the copy. Dealers who allow this kind of misleading copy aren’t worth doing business with and eventually will get caught. Been a victim of deceptive advertising? Don’t be afraid to notify your state’s consumer protection agency to file a complaint.

On the national level you can seek assistance from the Consumer Finance Protection Bureau. As the CFPB says on its website, “The Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, established consumer complaint handling as an integral part of the CFPB’s work. The CFPB began accepting complaints as soon as it opened its doors four years ago in July 2011. It currently accepts complaints on many consumer financial products, including credit cards, mortgages, bank accounts, private student loans, vehicle and other consumer loans, credit reporting, money transfers, debt collection, and payday loans.”

Good luck if you are purchasing a used car from a buy here, pay here dealer. It’s a good first step toward rebuilding your credit history (or establishing one). Just go into the process well informed.