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

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 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.

Collections are the most exciting activity at a Dealer Controlled Financing dealership. If your employees have properly worked the other processes at your dealership, then collections can be easy. The dealership can maintain a larger portfolio without increasing personnel expense.

Determining who to make loans to is one of the critical factors in the success of a dealer controlled financing business. Making the wrong decisions can cause you considerable collection work and expense than making good lending decisions. Poor underwriting can increase your delinquency, stunt your cash flow and trigger excessive charge-offs.

Do you want to improve your sales, increase collections and protect your dealership by enhancing compliance? Of course you do. The key to doing all of the above is being consistent.

Sales

...With the FTC and the CFPB?

I’ve written before about the various regulations auto dealers are required to comply with, the wave of new regulations expected now that the CFPB is up and running at full strength and the growing threat of increased enforcement action on the horizon as these agencies flex their new muscles. Today I want to look at the 3 top reasons dealers are not prepared.