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The Value Proposition For BHPH and Special Finance

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The Value Proposition For BHPH and Special Finance

I believe that automotive retailers will continue to face the brunt of legal, regulatory and legislative fervor from politicians and citizens watchdog groups who are convinced that car dealers are an enemy of the people and need to be at the very least, watched carefully, and perhaps punished severely because of what they do for a living.

I cannot tell you the number of times I've told people what I do for a living, only to have them roll their eyes and then proceed to tell me that they know that those buy here-pay here dealers and special finance lenders do nothing but prey on poor people who have no other options in their lives but to pay 20-25 percent interest for their vehicles.

For those that listen, this is what I tell them. I hope it's some help to you when you're faced with a legislator, lawyer, judge or jury who expresses the same opinion.

There is an underclass in our society, an underclass of people who for a variety of misfortunes and social and political reasons do not have the education, training or wherewithal to have what you have. Companies worth billions of dollars mark them with credit blemishes, because they have not paid the money back that they have agreed to pay when they agreed to pay it. In our society, that is a serious negative behavior, which results in punishment in the form of paying higher rates to borrow money because your past behavior indicates that person is a greater credit risk. Just ask anyone who ever transferred their account balance over to a credit card with one of those 0 Percent offerings for 12 months. If they make one late payment or go over their credit limit that 0 percent deal translates to 25-28 percent interest, overnight.

Still, despite their credit challenges these people need to get to work, take their children to school or go to the doctor's office. They need a vehicle, and vehicles cost money.

Twenty years ago, a dealer could buy a vehicle for $700, put $300 into it, and sell it to a buy here-pay here customer for $2,995 if they put $1,000 down. Every payment made went to the bottom line. Those days no longer exist, and if anyone tells you they still do, he or she simply doesn't understand the buy here-pay here business model.

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