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POLITICAL CLIMATE

The Growing Need for BHPH

BY DAVID ALGOOD, DIRECTOR OF SALES AND MARKETING AT AMAC
OF Month
Tip THE
The Buy Here Pay Here (BHPH) business A dealer looking to enter 15-50 loans per month. For this reason
AMAC offers financing to qualified BHPH dealers can be a great resource to build wealth for the BHPH business will likely nearly all BHPH dealers use a third par-
Provide a Customer looking to expand their business. multiple generations, while also increasing need between $500,000- ty to fund a portion of their operation,
often times allowing them to lower their
cash flow to withstand the economic ups
Service Department, not a and downs of the car business. In the past $3,000,000 dollars of working self-funding needs to less than $100,000.
Collections Department What’s included: several years, both banks and finance com- capital to fund a single lot Whether you have been in the BHPH busi-
panies have been very aggressive in their
ness for 3 generations or you are looking to
Listen, be understanding, and show Funding for Receivables purchasing of secondary customer con- operation doing between start a portfolio, choosing the right capital
partner, who both understands the BHPH
tracts. However, this trend is now changing
15-50 loans per month.
compassion but always bring the as the subprime cycle nears its end. In 2016 business and that will provide financing to
conversation back to discussing You Collect or We Collect alone, many subprime banks and finance the sub-prime and deep sub-prime indus- help you grow, is vital to your success.
repayment. Take thorough notes, companies, including Go Financial, Deal- try. This means that there is a huge base
allowing you to be informed for the er Funding, TAG Financial, Mark One and that you should be prepared to capture as The BHPH business can be extremely prof-
next contact. End each contact Floorplan Lines Santander have either substantially reduced these secondary customers come back into itable. Many dealers are able to cover 100%
restating your arrangements, this the purchase of contracts from independent BHPH stores, making the business more at- of their credit losses with interest income,
strengthens what you have agreed Simplified Insurance Tracking dealers or completely discontinued origina- tractive than ever for dealers. meaning they are able to make 100% of the
markup on their car, which in many cases is
tions. Any dealers that have put themselves
upon. If you cannot nail down in a position to rely solely on a retail financ- While many dealers realize there are nu- $4,000-$5,000 per unit. If your store could
complete repayment arrangements Reports Package ing source, or have chosen not to seek out merous advantages to being in the BHPH benefit from additional sales with great
to bring the customer current, set a additional capital, must adapt quickly and business, most do not have sufficient capital margins then entering or expanding in the
time to revisit the situation with the Training prepare themselves for the future. This ar- to grow their portfolio as they wish. There BHPH business may be for you.
customer. Have a positive attitude ticle will lay out the basic benefits of having are a couple of financial considerations that
on each call or in-person contact, a properly capitalized BHPH dealership, in- must first be understood. The days when Ace Motor Acceptance Corporation
expecting good results will help Bulk Roll in for Existing Contracts stead of relying on retail financing sources dealers used to recapture nearly all the (AMAC) is a known capital provider for
in these turbulent times.
both seasoned BHPH dealers and those
achieve them. vehicle cost with the down payment and that are looking to enter the market.
finance the profit are long gone. In recent
Cash Flow from Payments The aggressiveness of the subprime mar- years, the market has shifted dramatically AMAC’s BHPH in a Box™ program offers
ket caused asset backed securities to see an with vehicle cost rising and down payments credit lines for receivables, floor plan lines
increase in both delinquency and losses. declining. According to Subprime Analyt- of credit, management reporting, training
According to CNN Money and Subprime ics, as of mid-year 2016, BHPH dealers and discounted GPS devices. Also, for deal-
Analytics, there has been a rise in both low have an average vehicle cost of $7,007 with ers that want help with collections, AMAC
down payment and extended-term loans, a down payment of $727 leaving them with can provide servicing of the accounts, and
Ace Motor Acceptance Corp. (AMAC) specializes in supplying capital to BHPH dealers. Our as well as loans to borrowers with no Fico $6,280 cash in deal (CID). Dealers have the customer may still pay at the lot. The
BHPH in a Box™ program provides capital to fund contracts and floorplan lines of credit scores. As of February 2016, asset-backed shifted to selling a newer and nicer vehicle BHPH business is an excellent choice for
to purchase inventory. By offering both, AMAC improves your cash flow by allowing you to securities saw a 34% increase in losses. As with a lower down payment, which in turn dealers who do not want their livelihood to
the performance of the securities continues
be at the mercy of secondary banks. n
pay off your floorplan when the deal is funded. We understand what it takes to grow your to deteriorate, the coming year will see a creates a larger cash burden. This has creat- __________________________________
ed a significant financial barrier to enter or
business. AMAC allows you to maintain your customer relationship, leading to increased significant tightening in the subprime sec- grow a BHPH operation. David Algood is the Director of Sales and
repeat and referral business. Instead of selling off your portfolio or doing an expensive tor. According to Equifax, in 2016, 23.5% Marketing at AMAC, a rapidly growing fi-
of all new auto loans were subprime bor-
nance company doing business in the East-
payment stream, AMAC has a superior program that allows you to retain strong monthly rowers, many of which were securitized. A dealer looking to enter the BHPH busi- ern half of the United States. Anyone want-
ness will likely need between $500,000-
cash flow from customer payments. We approve you, not your customer. The BHPH in a As several large players exit the Indepen- $3,000,000 dollars of working capital to ing more information can contact AMAC
Box™ program is the most complete program in the industry. To learn more call AMAC dent Dealer marketplace and securitization fund a single lot operation doing between at 704-882-7100 (ext. 7509) or visit their
website at www.acemotoracceptance.com.
standards tighten, there will be a substan-
today at 704-882-7100 ext. 7509. tial reduction in the availability of credit in

Acemotoracceptance.com 704-882-7100 ext. 7509
GIADA Independent Auto Dealer FEBRUARY 2017 | 31