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By: David Meyer, Executive Vice President, Automotive Solutions
The Buy-Here-Pay-Here market is stronger than ever as we finish up the final quarter of 2012. Thousands of dealers across the nation have made the decision to offer in house financing as a way to broaden their customer base and be successful in an economic situation. If you are new to this industry, or have been in the BHPH operation for a while, there are a few critical tips that need to be noted. I’ve listed the most prominent below.
Step 1: Capital
Adequate capital is the most important aspect of becoming a successful BHPH dealer. If you run out of money before you reach the point of being cash flow positive, your chance of success is virtually non-existent. As they say, "it takes money to make money".
Providing a deal structure that works for both the dealership and the customer is another significant part to helping your BHPH dealership flourish.
While customer clientele, market condition, and vehicle inventory are all aspects that affect sales---à deal structures, term, payment and interest rates are just as important when making a deal with a customer. Payments should be structured to fit the customer’s budget and the total payments due in a month should not exceed one week's take home pay. Each customer’s budget varies from an array of circumstances such as amount of rent and other installment debt, that affect each customer’s ability to pay, and should be taken into account when determining if your customer will be able to handle the payment.
Being a BHPH Dealer means you are in the finance business. To be successful you must have good collection practices. The collection process starts prior to the sale with a complete credit application and reference list including addresses and phone numbers. Friends and family make the best references. It is always important for the dealer to ask for all relevant phone numbers such as home, mobile and office. Every vehicle delivered should have a starter interrupt and/or a GPS vehicle tracking unit. The best option is a GPS with a starter interrupt feature. The GPS vehicle tracking helps you recover the vehicle, if required, and the starter interrupt substantially improves your chances of getting paid on time and in full. Spireon offers a full range of GPS vehicle tracking devices specifically designed for the BHPH industry, you can learn more at Spireon Automotive Solutions.
The final and utmost important step to be successful in the BHPH business is to provide the optimum quality of care and service to customers. It is important to develop customer-friendly policies, coach your employees to deliver excellent customer service, and personalize each customer interaction. By establishing a united and successful customer service team, you will create customer loyalty and notice an increase in customer referral.
Once a customer purchases a vehicle from your Buy Here Pay Here dealership, a dealer should strive to provide the best service possible by offering convenient ways to make payments, by providing dedicated professional representatives to assist customers, and by acknowledging the ongoing reputation that customers are generating about your dealership’s service and inventory, especially after the sale.
To be successful you have to take care of the customer. BHPH dealerships must identify their customers’ needs, not just their wants. Dealers can only retain customers by earning their trust. BHPH dealers should sell quality vehicles at fair prices and treat every customer with respect. Quality care will produce quality returns!