The Buy Here – Pay Here industry has had an image problem for years. Too many people remember the trailer sitting on a gravel lot with a few beat-up cars around selling barely running cars at astronomical interest rates to people who couldn’t get a loan anywhere else. Unfortunately, there are still a few of those dealers around and several attacks have been launched at the industry as a whole based primarily on the actions of this minority.

In last month’s article we discussed the some of the issues Buy Here – Pay Here and Lease Here – Pay Here dealers face in today’s difficult wholesale markets. We looked at the choices dealers must make in deciding whether to increase their Cash In Deal policy in order to offer vehicles comparable to what they have sold in the past or whether to maintain that CID policy and offer the higher mileage, older vehicles that now fit that policy with today’s higher wholesale prices.

The time has come for you to buy new software for your dealership. You are ready to start the research process but before you begin, whether you run a Buy Here - Pay Here, Lease Here - Pay Here or Independent Retail dealership, you need to know these 5 things to make sure you purchase the right dealership management software to meet your needs: 

I just got off the telephone with a dealer who was complaining he hadn’t been able to buy a single unit at the auction today. He claimed every car he wanted went for over $3500 and, with a cash in deal policy of $2500, average reconditioning expenses of just about $700 and average customer down of just under $800, he just couldn’t make $3500 cost vehicles fit his business model. Although the numbers may have been a little different in each case, he is certainly not the first dealer I have had that discussion with.

Are You a Winner or are you a loser?

We're excited about our new blog and the opportunity it provides to share important information about BHPH software, finance & insurance software, dealership management systems, dealership accounting amd other facets of the BHPH business. We hope to share important insights to help our clients and visitors learn more about buy here - pay here and lease here - pay here, or dealer controlled financing (DCF) as we prefer to call these businesses.

In the Dealer Controlled Financing business, it is critical that we take responsibility for our customer and make sure we put them in the right vehicle with the right terms to help them succeed.  The first step is to explore the customer’s needs and help them to select the correct vehicle for them. I’ll never forget the customer with a wife and 3 children, 2 still in car seats, who came on my lot to look at this really pretty red 2-door Cavalier I had in the front row. It took a little work but I convinced them this wasn’t the right car for them from a practicality stand point. We have all experienced having a customer purchase the “wrong” vehicle. They typically spend the entire term of the loan trying to get you to trade them into a different vehicle. If the vehicle is not right for them, they also are more likely to not pay as agreed or even return the car when it can no longer satisfy their needs. Helping your customer to select the vehicle that best meets their needs is the first time you must take some responsibility for your customers.

3 Keys to Underwriting Success in BHPH

The dealer-controlled financing business is not just about making loans, it’s about making the right loans. Since the dawn of buy here - pay here in the 1950s, dealers have been trying to figure out how to decide whom to lend money to. Over the years dealers have used systems ranging from the “fog a mirror” system where a dealer will approve anyone and hope for the best, to sophisticated algorithms that attempt to predict which potential customers will pay. No matter what system you use, there are a few universal truths that you must pay attention to.