Car Dealer Insider June 1, 2008
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Car Dealer Insider June 1, 2008

Buy Here, Pay Here to shine amid sub-prime mess

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Buy Here, Pay Here to shine amid sub-prime mess

The subprime lending crisis and sluggish economy is creating havoc for many auto dealers. Consumers struggle to make mortgage payments, secure financing, and pay the bills are leaving little money in the pot for big-ticket purchases like new vehicles. But the escalating gloom and doom could help score a nice win for buy here, pay here (BHPH) dealers who are on the ball.

The consensus at last month's 10th annual conference of the National Alliance of Buy Here, Pay Here Dealers ( was "the long term opportunities in the BHPH business have never been better," says CPA Ken Shilson, founder and president of NABD.

"The current economic conditions are perfect for BHPH," adds sales and management training consultant George Dans, who presented a workshop at the NABD conference.

What's fueling this optimism? "Higher quality customers are falling back into the BHPH space given the real estate collapse and the economic climate," Ken tells Dealer Business Briefing.

Sub-prime lenders which had been buying down to credit scores of 500 to 540 - typical BHPH turf - are no longer buying as deeply, explains Ken. This is already more evident in Florida, where the real estate downturn occurred earlier, he says. So a greater number of sub-prime customers - a better credit risk than the typical BHPH profile - will be forced to turn to BHPH to help meet their vehicle-financing needs.

"More than 60 percent of the traffic going to new car dealers is now sub-prime (which is largely being turned away), and sub-prime is dripping down to un-bankable," George tells us.

George says it can take these customers years to get back to good credit levels. As for existing BHPH customers, he's not worried the economy or higher gas prices will knock them out of the picture. "Where else can... (302 of 1207 words)

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