Dealer Playbook · United States
By TradeBasis · Published October 3, 2026 · Figures verified October 3, 2026
Buy here pay here interest rates averaged a balance-weighted derived 25.39% for subprime borrowers in the Federal Reserve’s matched sample covering Q1 2018 to Q3 2025, against 14.60% for traditional subprime auto loans. That figure is imputed from principal, payment and term rather than read from a disclosed contract APR — which is exactly why published rates disagree so widely.
| Measure | Value and period | Source |
|---|---|---|
| Derived rate, subprime BHPH | 25.39%, Q1 2018 – Q3 2025 | Federal Reserve |
| Derived rate, traditional subprime | 14.60%, Q1 2018 – Q3 2025 | Federal Reserve |
| Derived rate, prime BHPH | 11.81%, Q1 2018 – Q3 2025 | Federal Reserve |
| Average origination principal, subprime BHPH | $15,402, Q1 2018 – Q3 2025 | Federal Reserve |
| Average term, subprime BHPH | 55 months, Q1 2018 – Q3 2025 | Federal Reserve |
| Weekly or biweekly payment share, subprime BHPH | 14.43%, Q1 2018 – Q3 2025 | Federal Reserve |
All six rows are reproduced from Table 1B of the TradeBasis BHPH Economics and Portfolio Benchmarks 2026 report, which carries the full population definitions and caveats.
Quick Answer
- The headline figure: 25.39% balance-weighted derived rate for subprime BHPH loans, Federal Reserve matched sample, Q1 2018 to Q3 2025.
- The comparison that matters: 14.60% for traditional subprime in the same sample. BHPH is roughly 10.8 percentage points higher than conventional subprime, not an order of magnitude higher.
- It is derived, not disclosed. Imputed from principal, payment and term. Term data covers about 63% of the sample and payment frequency about 35%.
- Do not build an amortization schedule from it. The report explicitly warns that the separate averages describe the population, not one representative loan.
- Higher figures you see quoted usually describe someone else. The 38%-plus average cited in the Credit Acceptance settlement refers to an indirect subprime lender, not BHPH operators financing their own paper.
- BHPH loans are smaller and shorter but cost more per month: $15,402 principal, $405 payment, 55 months, against $17,424 / $350 / 64 months for traditional subprime.
- Payment frequency changes the math. 14.43% of subprime BHPH loans pay weekly or biweekly, against 0.67% of traditional subprime.
- The rate is not the return. Subprime Analytics put the average default rate at 36.04% and average net loss per charge-off at $6,365 for 2018 to 2021.
What the Federal Reserve data shows about buy here pay here interest rates
The most defensible figures available on buy here pay here interest rates come from a Federal Reserve matched sample built on the Equifax Consumer Credit Panel, covering Q1 2018 through Q3 2025. The Fed does not have a field labelled “buy here pay here,” so the population is identified as a proxy — loans whose characteristics match the BHPH lending pattern.
Within that sample, four populations can be compared on the same basis:
| Measure | BHPH subprime | BHPH prime | Traditional subprime | Traditional prime |
|---|---|---|---|---|
| Derived interest rate | 25.39% | 11.81% | 14.60% | 5.65% |
| Average origination principal | $15,402 | $19,340 | $17,424 | $21,122 |
| Average monthly payment | $405 | $394 | $350 | $368 |
| Average term | 55 months | 62 months | 64 months | 61 months |
| Weekly or biweekly payments | 14.43% | 7.42% | 0.67% | 0.38% |
Federal Reserve matched sample, Q1 2018 to Q3 2025. Reproduced from Table 1B.
Three things in that table are worth sitting with.
The gap is large but not cartoonish. Subprime BHPH at 25.39% sits about 10.8 percentage points above traditional subprime at 14.60%. That is a serious premium, and it is a long way from the “BHPH charges whatever it wants” framing that dominates general coverage.
BHPH loans are smaller and shorter, yet cost more per month. $15,402 over 55 months at $405, against $17,424 over 64 months at $350. The customer borrows less, repays faster, and pays more each month. That combination is the rate, expressed in the only terms the customer experiences.
Prime BHPH exists, and it is cheaper than traditional subprime. At 11.81%, prime borrowers in the BHPH proxy pay less than subprime borrowers at conventional lenders. The spread is driven by credit tier at least as much as by the channel.
Why the rate is “derived” and what that changes
This is the part most coverage skips, and it is the reason the number is trustworthy rather than despite it.
The Federal Reserve sample does not carry a disclosed contract APR. The 25.39% is imputed: solved for from the average origination principal, the average payment and the average term within the population. It is an implied rate, not a rate anybody signed.
Two limits on the underlying data matter. Term information covers roughly 63% of the sample, and payment frequency roughly 35%. So the inputs to the imputation are themselves partial.
And there is a rule the report states explicitly, which anyone quoting these numbers should carry with them: the separate averages must not be recombined into a representative amortization schedule. Each average describes the population on its own terms. There is no single loan of $15,402 at 25.39% over 55 months paying $405 a month sitting in the data. Building one and presenting it as typical produces a loan that does not exist.
This is a real constraint and it is also why the figure is useful. A number that comes with its own method and its own error bars can be checked. The round numbers that circulate without either cannot.
Two numbers in every BHPH deal depend on what the vehicle is worth
What the dealer pays to acquire and recondition the unit, and what it brings back if it is repossessed. TradeBasis values vehicles against live US dealer listings rather than lagging guide-book averages, matches comparables by trim, and shows every comparable with a link to its source ad so an appraiser can exclude outliers and watch the value recalculate.
Lite $99/month, 1 user. Pro $249/month, up to 10 users. Month-to-month, no contract, no setup fee, all data included.
Why you will see much higher buy here pay here interest rates quoted
Search this question and you will find numbers from 15% to over 100%. Most of the spread is not disagreement. It is different populations being quoted as though they were the same one.
The Credit Acceptance figure describes a different business
On September 17, 2026, the New York Attorney General announced a roughly $700 million multistate settlement with Credit Acceptance Corporation, joined by 39 states and the District of Columbia. The announcement stated that average rates on the loans at issue exceeded 38%, with some exceeding 100%. The package comprises more than $630 million in debt relief for over 55,000 consumers, $60 million in restitution for consumers who lost vehicles, and $15.5 million in penalties.
Those rate figures are real and they are properly sourced. They are also not a measurement of the buy here pay here industry. Credit Acceptance is an indirect subprime lender that works with dealers on contracts those dealers originate. A buy here pay here operator, by contrast, finances its own paper and collects it in house. Different business, different population, and a figure drawn from one enforcement action against one company is not an industry average in any case.
The settlement does matter to BHPH operators, but for its conduct terms rather than its rate numbers — the 95% forgiveness requirement for certain at-risk borrowers who default within 12 or 18 months and whose vehicles are repossessed and sold, the limits on collecting balances, and the requirement that the lender contact consumers separately from the dealer to disclose purchased add-on products and offer cancellation. Those are settlement-specific conditions binding one company, not a general rule, but they indicate where state enforcement attention is pointed. The full regulatory context is in the collections and regulation section of the benchmarks report.
State caps put a legal ceiling on some of it
A number of states limit rates on used-vehicle retail installment contracts, and the structure of those limits varies — some tie the cap to vehicle age, some to price. A national average necessarily blends capped and uncapped jurisdictions. Any dealer writing paper should confirm the current limit in each state they operate in with counsel. Nothing here is legal advice.
Weekly payments make casual math wrong
14.43% of subprime BHPH loans in the Fed sample use weekly or biweekly schedules, against 0.67% of traditional subprime. Someone who sees a $100 weekly payment and reasons “about $400 a month” has already introduced an error, because 52 weekly payments is not 12 monthly ones. Annualizing from the wrong period count is a common source of inflated published rates.
What NIADA’s 2021 composite adds, and why it differs
The other figures frequently quoted come from NIADA’s 2021 industry composite, which is a different exercise entirely: contributed operator data rather than credit-bureau records.
| Measure | Value | Population |
|---|---|---|
| Average amount financed | $13,753 | NIADA 2021 composite |
| Average cash down payment | $1,192 | NIADA 2021 composite |
| Average contract term | 172 weeks | NIADA 2021 composite |
| Average gross profit per vehicle | $6,981 | NIADA 2021 composite |
| Average default rate | 36.04% | Subprime Analytics, 2018-2021 |
| Average net loss per charge-off | $6,365 | Subprime Analytics, 2018-2021 |
Reproduced from Table 8A, historical reference values. Note the contract term is expressed in weeks, not months.
Two cautions. These are 2021 figures, retained for historical context, drawn from contributing operators whose mix differs from the Fed’s bureau-based population. And the 172-week term is roughly 40 months — materially shorter than the 55 months in the Fed sample, because the two are measuring different populations in different years, not because the market changed by 15 months.
The temptation with two tables like these is to divide one figure by another and produce something new — a loan-to-value, a markup, an implied income. The benchmarks report explicitly warns against it, and the warning is correct: averages drawn from different datasets with different denominators do not combine into a meaningful third number.
How to calculate the rate on one real contract
Because the averages above describe populations rather than loans, the only way to know the rate on a specific contract is to compute it. Five steps.
1. Start from the amount financed
Vehicle price plus taxes and fees, minus cash down and any trade allowance. Not the sale price. Using the sale price understates the rate.
2. Count the actual payments
Weekly, biweekly or monthly, and how many of them. This is where most informal calculations go wrong.
3. Isolate the finance charge
Payment multiplied by number of payments, minus amount financed. The remainder is what the customer pays for credit, in dollars — frequently a more persuasive number in a customer conversation than a percentage.
4. Solve for the periodic rate and annualize
A spreadsheet RATE function does this in one cell. Multiply the periodic result by the number of periods in a year.
5. Reconcile against the disclosed APR and the state cap
Compare to the APR disclosed under the Truth in Lending Act on the retail installment contract. Gaps usually trace to which fees sit inside the finance charge. Then check the result against the applicable state limit.
What this means for your lot
The rate is the most visible number in a BHPH deal and one of the least predictive of what the deal returns.
A contract carrying a 25% implied rate that charges off in month fourteen does not return 25%. Subprime Analytics put the average default rate at 36.04% and the average net loss per charge-off at $6,365 across 2018 to 2021. This is why operators track cumulative cash-on-cash return by origination pool rather than headline yield, and why those pool returns — set out in the deal economics section of the report — land well below any rate quoted on a contract.
Which puts the weight back on two numbers that have nothing to do with the finance office.
What the vehicle cost to acquire and recondition sets the principal. The principal, the payment and the term are the three inputs the rate is derived from, so an acquisition number that is $1,200 too high does not just compress gross — it raises the amount the customer has to carry, on a borrower population where 36% of contracts historically did not run to term.
What the vehicle brings back on repossession sets the loss. The $6,365 average net loss per charge-off is a function of what the unit was worth when it came back, against what was still owed.
Both are valuation questions, and the loss and return figures a BHPH operator reports are only as reliable as the valuations underneath them. That is the honest link between appraisal accuracy and a lending business, and it is the whole of it: TradeBasis is appraisal and market intelligence software. It is not BHPH loan servicing, underwriting, collections or GPS software, and it has no BHPH-specific features. What it does is tell you what a vehicle is actually worth in your market, at acquisition and at recovery.
For the wider economic setting those contracts are written into, the TradeBasis USA BHPH Macro Conditions Index read 40.4 out of 100 in August 2026, down 14.2 points from May. The index is experimental, and it describes the national economic backdrop — employment, household budgets and funding conditions — rather than measuring or predicting BHPH loan performance.
Questions dealers ask
What interest rate do buy here pay here loans charge?
Subprime buy here pay here loans carried a balance-weighted derived interest rate of 25.39% in the Federal Reserve’s matched sample covering Q1 2018 to Q3 2025, against 14.60% for traditional subprime auto loans, 11.81% for prime BHPH loans and 5.65% for traditional prime loans. The 25.39% figure is imputed from average principal, payment and term rather than observed from contract disclosures, so it is an implied rate rather than a stated APR. Actual contract rates vary by dealer, by borrower and by state, because several states cap rates on used-vehicle retail installment contracts.
Why is the rate described as derived rather than an APR?
Because the Federal Reserve sample does not contain a disclosed contract APR field. The 25.39% figure is imputed by solving for the rate implied by average origination principal, average payment and average term within the BHPH proxy population. Term information covers roughly 63% of the sample and payment frequency roughly 35%. The report also warns that the separate averages should not be combined into a single representative amortization schedule, because each average describes the population on its own terms rather than describing one typical loan.
Why do some sources quote rates above 30% or even 100%?
Usually because they are describing a different population. The New York Attorney General’s September 17, 2026 announcement of a roughly $700 million multistate settlement with Credit Acceptance Corporation stated that average rates on the loans at issue exceeded 38%, with some exceeding 100%. Credit Acceptance is an indirect subprime lender that purchases or services contracts originated by dealers; it is not a buy here pay here operator financing its own paper. A figure drawn from one enforcement action against one lender is not a measure of the BHPH industry, and mixing the two produces a number that describes neither.
What is the average loan amount and term on a BHPH contract?
In the Federal Reserve’s Q1 2018 to Q3 2025 matched sample, subprime BHPH loans averaged $15,402 in origination principal with an average monthly payment of $405 over an average term of 55 months. Traditional subprime auto loans in the same sample averaged $17,424 in principal, $350 per month and 64 months. BHPH loans are therefore smaller and shorter but carry higher payments. Separately, NIADA’s 2021 industry composite reported an average amount financed of $13,753, an average cash down payment of $1,192 and an average contract term of 172 weeks.
Why are BHPH payments often weekly or biweekly?
The practice aligns collection with the borrower’s pay cycle, which is a collections strategy rather than a pricing one. In the Federal Reserve’s matched sample, 14.43% of subprime BHPH loans used weekly or biweekly payment schedules against 0.67% of traditional subprime loans and 0.38% of traditional prime loans. The practical consequence for anyone calculating a rate is that the number of payments in a year is not twelve, and assuming it is will produce a materially wrong figure.
Are BHPH interest rates capped by law?
In several states, yes. Rates on used-vehicle retail installment contracts are limited by state statute in a number of jurisdictions, and the applicable cap can vary by the age or price of the vehicle. Because the limits and their structure differ considerably from state to state, a dealer should confirm the current cap in each state where contracts are written with counsel rather than relying on a national figure. Nothing in this article is legal advice.
How does the interest rate relate to what a BHPH dealer actually earns?
Less directly than the rate alone suggests, because a substantial share of contracts do not run to term. Subprime Analytics data for 2018 to 2021, reported in NIADA’s 2021 composite, put the average default rate at 36.04% and the average net loss per charge-off at $6,365. A contract carrying a 25% implied rate that charges off in month fourteen does not return 25%. This is why operators track cumulative cash-on-cash returns by origination pool rather than headline rates.
The Bottom Line
The best-sourced answer on buy here pay here interest rates is 25.39%, balance-weighted and derived, for subprime BHPH borrowers in the Federal Reserve’s Q1 2018 to Q3 2025 matched sample — against 14.60% for traditional subprime in the same sample. Carry the qualifiers with the number, because they are what make it worth quoting: it is imputed from principal, payment and term rather than read off a contract, and the separate averages behind it do not reassemble into a typical loan.
Most of the wilder figures in circulation come from somewhere else. The 38%-plus average in the Credit Acceptance settlement describes an indirect subprime lender, not a buy here pay here operator. Weekly payment schedules annualized as though they were monthly produce inflated results. And state rate caps mean a national average is always blending jurisdictions with very different legal ceilings.
For an operator, the more useful observation is that the rate is a poor proxy for the return. With an average default rate of 36.04% and an average net loss per charge-off of $6,365 across 2018 to 2021, what a BHPH portfolio actually produces is set by how many contracts perform and what the collateral recovers — not by the number on the contract. Both of those run through the vehicle’s value, at the point it is bought and at the point it comes back.
Sources
- Federal Reserve, matched sample on the Equifax Consumer Credit Panel, Q1 2018 to Q3 2025 — derived interest rates, origination principal, payment, term and payment frequency by population. Compiled in Table 1B of the BHPH benchmarks report.
- NIADA, 2021 Used Car Industry Report composite, and Subprime Analytics 2018-2021 — amount financed, cash down, contract term, gross profit per vehicle, default rate and net loss per charge-off. Compiled in Table 8A.
- New York State Attorney General, “Attorney General James Secures $700 Million from Abusive Subprime Auto Lender Credit Acceptance Corporation,” September 17, 2026 — settlement amount and components, participating jurisdictions, rate allegations, conduct requirements.
- TradeBasis, USA BHPH Macro Conditions Index — August 2026 composite reading and three-month change.
- Compiled in TradeBasis, BHPH Economics and Portfolio Benchmarks 2026.
Related reading from TradeBasis
| Resource | What it covers |
|---|---|
| BHPH Economics and Portfolio Benchmarks 2026 | The full research report: market size, credit performance, deal economics, funding, collections and regulation, with every figure sourced and dated. |
| Negative Equity Trade-Ins in 2026 | How lender advance caps decide whether a deal funds, and why ACV accuracy is the cheapest lever in the structure. |
| Used Car Holding Costs in 2026 | What a day on the lot costs, and why an acquisition number set too high becomes a loss twice over. |
| FTC CARS Rule Status in 2026 | Why the vacated rule is not in force, and what federal and state requirements still apply to dealer pricing and disclosure. |
| Appraisal Software for Independent Dealers and Wholesalers | Which tool fits which kind of operation, and the franchise features a small store can safely ignore. |
| TradeBasis vs vAuto · TradeBasis vs Carbly | Side-by-side comparisons of TradeBasis against the two tools independent dealers most often evaluate. |
About TradeBasis
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TradeBasis is not affiliated with Cox Automotive, CDK Global, any OEM or any auction house. It is not BHPH loan-servicing, underwriting, collections or GPS software and it has no BHPH-specific features.
Figures in this article are reproduced from the TradeBasis BHPH Economics and Portfolio Benchmarks 2026 report and from the primary sources named above, with their original periods and populations. The 25.39% rate is derived from principal, payment and term, not an observed contract APR. Car-Mart and Credit Acceptance figures describe individual companies, not the industry. This article is informational and is not legal, tax or financial advice; confirm state rate caps and disclosure obligations with counsel in each state where you write contracts.