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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?
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!