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.
While many of the dubious practices in question have long been eliminated at most dealerships that offer dealer controlled financing, we have not done a very good job of promoting the correct image of today’s DCF dealer. Many of today’s BHPH or LHPH dealers run operations as large and complex as any new car dealership. In fact, many of today’s DCF dealers do run new car dealerships as well.
The DCF market has continued to grow over the years and various estimates put the number of BHPH or LHPH dealerships in the US at between 25,000 and 30,000. A study by Experian found that just over 9% of all vehicles financed in 2010 were financed by a dealer controlled financing dealer. Almost 65% of these customers had a credit score below 550. These deals consisted of over 1.8 million loans totaling $24 billion.
Without DCF dealers, that means almost 1.2 million of these loans would never have happened. We all know how necessary basic transportation is in being able to get and hold a job and being able to provide for our families. Without dealer financing many of these DCF customers would not be able to travel to and from their work and do shopping for their family. Many would be added to the rolls of the unemployed, requiring government assistance to live.
In addition, in a time when states and municipalities are struggling to meet budgets, the sales tax revenue from these $24 billion in sales would disappear. The jobs provided by these 25 – 30,000 dealers would also no longer exist and the millions of payroll dollars they provide would be removed from the local economies.
A properly run DCF dealership can provide a significant return for those dealers who choose to take the risks associated with financing this segment of the marketplace; but it also provides a valuable service to the communities where those dealerships choose to operate. Many dealerships loan as much money as a small local bank. Many DCF operators also make large contributions to their communities in other ways. The profits they make are returned to their communities in the form of charitable contributions, sponsorships, and other community activities.
As an owner or employee of a BHPH or LHPH dealership, you should be proud of what you do. You provide a valuable service to your community and to the customers who depend upon you for their transportation needs. Our industry is an important part of the economy as a whole, serving a part of that economy that many others choose to ignore. In this time of repeated attacks on our business, we must combat those who do not understand the full value of our contributions. We must stand tall together, full of pride in the contributions we make and educate our communities in the benefits our businesses make available.
