The Buy Here Pay Here & Lease Here Pay Here Business and BHPH & LHPH Dealership Management Software

It's all to do with the training: you can do a lot if you're properly trained.

Buy Here – Pay Here operators across the country have been debating over the last few years whether to embrace the latest innovations in technology or to stick with the traditional way of operating their businesses. It has been almost 15 years since the first payment protection devices hit the market. Since then, new technologies that can be adapted to BHPH seem to appear almost weekly. There is GPS, auto dialing, SMS text messaging, geo fencing, integrated credit card and ACH payment processing, and online payments on the collections side and websites, Internet inventory posting, web based applications and lead generation, and prospect scoring on the sales side.

As any of you who know me already know, I am a big fan of Dave Anderson. I have shared some of his writings here before and I am pleased that Dave has given me permission to do so again. If you are unfamiliar with Dave and his work, I highly recommend that you learn more about him.

There is currently a post running on AutoDealerPeople.com titled, “What Vehicle are on Your Do Not Buy List?". We all know that one of the most important questions in the purchase of any one vehicle for inventory is, will it “run the note?”  Every dealer also knows that some vehicles experience more issues than others. Do you keep a Do Not Buy List for your BHPH dealership? If you don’t, you should!

Part 2 - Collections Promotions

As I said in the first part of this series here, properly designed promotions are more fun than advertising. Promotions should involve your employees, your customers, friends, family, neighbors, etc. All promotions should be done in a festive atmosphere. Plan the promotions so that as many customers as possible are included. Try to avoid promotions that have just one winner. It is very difficult to get people excited about one grand prize. People are more likely to participate if they think their chance of winning is better. Use promotions to set your dealership apart from your competition. Promotions are an important factor in helping you retain existing customers by making their experience with your dealership a pleasant one and reminding them why they chose to do business with you in the first place.  Make sure you take plenty of pictures and post them at your dealership, on your Facebook page and on your website to show customers who chose not to participate all the fun they missed.

Part 1 - Sales Promotions

Properly designed promotions are more fun than advertising. Promotions should involve your employees, your customers, friends, family, neighbors, etc. All promotions should be done in a festive atmosphere. Plan the promotions so that as many customers as possible are included. Try to avoid promotions that have just one winner. It is very difficult to get people excited about one grand prize. People are more likely to participate if they think their chance of winning is better. If a promotion has one winner, there will be less participation than if there were twenty. The prizes do not have to be large, but they should be plentiful. Make sure you take plenty of pictures and post them at your dealership, on your Facebook page and on your website to show customers who chose not to participate all the fun they missed.

It is easy to sell more cars in the Buy Here-Pay Here industry. All you have to do is say “Yes”. The challenging parts are knowing which customers to say “Yes” to and how to collect the balance of the loan.

Perhaps the single biggest issue on whether a customer can successfully pay off his account is how you structured the deal. Poor deal structure will ensure you will have collection issues throughout the loan and will significantly increase your repossession and charge-off numbers. The wrong deal structure will set your customer up for failure. 

Perhaps the single biggest factor on whether a customer can successfully pay off his BHPH or LHPH account with your dealership is how you structure the deal. Poor deal structure will ensure you will have collection issues throughout the loan and will significantly increase your repossession and charge-off numbers. The wrong deal structure will set your customer up for failure.

Many conventional Buy Here - Pay Here dealerships charge excessive gross profits and/or the maximum interest rate their state allows. Either of these two practices will negatively affect your ability to structure a deal your customer can complete successfully. In this article we will take a look at interest rates. In my next post I will address gross profits.

I ran across an interesting article last week in Business Insider. It was about a survey released in December of last year concerning financial services done by the Federal Deposit Insurance Corporation (FDIC). The survey found that roughly 1 in every 12 US households, or some 17 million adult Americans, are “unbanked”. That means they lack a current checking or savings account.