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BHPH Profit Opportunities for Auto Dealers Continue to Rise

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BHPH Profit Opportunities for Auto Dealers Continue to Rise

By Neil Fisher, RVP Automotive Solutions

“In the low yielding economic environment of today, BHPH profit opportunities have never been better” Chris Callero, Experian Automotive’s President, recently stated at a Press Conference to the mainstream public regarding Auto Sales in 2012.

According to the latest Experian study, 16.6% of all financed used vehicle purchases were done by BHPH dealers. On the leasing side, 23.6% of all used vehicle leases were done by BHPH dealers. Even as some potential customers improve their credit scores sufficiently to qualify for subprime or even conventional financing, an even larger number suffers setbacks that drop their scores out of the range acceptable to outside lenders and enter the Buy Here – Pay Here market as their only available option.

Back to the Basics---àBuy Here – Pay Here (BHPH) offers you the ability to retail vehicles that you currently wholesale and make more profit. Taking trade-ins that don’t meet the standards for your retail sales operation to the auction can be a gamble. Selling prices at the auction rise and fall with the season, market conditions, demand and various other factors but with a Buy Here – Pay Here operation, you are able to set the selling price and make profit margins that are consistently higher than those at most retail only dealerships. Buy Here – Pay Here also offers you the opportunity to sell to customers that do not have the cash to purchase outright and do not meet the qualifications imposed by your lenders. Like the wholesale marketplace with vehicles, the loan market is also always in a state of flux. Required credit bureau scores, stipulations and other credit criteria are constantly changing. Lenders move in and out of the various credit levels. The deal you were able to get bought a year ago may be turned down today. With a Buy Here – Pay Here operation, you decide who you wish to finance, not some outside lender.

So you have the cars and you have the ambition – what else do you need to consider?

  • There are plenty of New Customers! Manheim now estimates that over 20% of all used vehicle loans made during the quarter ending June 30, 2012 were with customers who had a 550 Beacon Score or less. About 16% of that market was attributable to buy here, pay here. Given the challenging economic environment of today, finding credit-challenged “unbankable” consumers is no problem.
  • Access to Capital – The capital markets are now opening and money is more readily available for good operators who have experienced management, efficient systems, and favorable portfolio performance metrics. The private equity market is targeting the best BHPH operators with a willingness to invest large sums of capital. What do they look for? How do you find them? What are the benefits? Those questions are too extensive to answer here but at the upcoming East Coast NABD BHPH Conference in Atlanta, on October 21-23, we will have one of the nation’s leading investment bankers do just that! Portfolio performance metrics (static pool and loss/liquidation calculations) are needed to make the right financial decisions. We will be set up at booth #311 during the show, feel free to come talk to our team of professionals about the opportunities in BHPH.
  • Skilled Personnel – This is important to keep in mind. Skilled personnel are needed to execute efficiently and effectively. It takes more skill and knowledge to prosper than ever before. Experienced personnel must be trained and developed, not just recruited. In the future, the industry must strive to attract young, talented professionals with new skills. Smart operators realize that the more they learn, the more they earn!
  • New Technology – New technology is changing the way the BHPH business is being conducted. Spireon offers the most reliable Automotive GPS vehicle tracking solutions on the market through its two leading brands GoldStar GPS and EnfoTrace GPS. These solutions mitigate the risks associated with BHPH lending. The current technology is the best in BHPH history! To learn more about our extensive line of products you can visit our corporate Spireon website, or visit and

Only you can decide if the Buy Here – Pay Here business is right for you. Obviously the opportunity is there and the potential for profit is there….The customers are waiting!

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