Tag Archive | "buy-here"

NCM Associates’ Kerr to Break Down BHPH at Dealer Summit


TAMPA, Fla. — Organizers of Dealer Summit have announced that NCM Associates’ Dustin Kerr will present a session dedicated to buy-here, pay-here (BHPH) operations at the event, which will take place May 3-5, 2016, at the Sheraton Tampa Riverwalk Hotel.

“As a trainer, operator and moderator, Dustin Kerr has a wealth of experience and wisdom,” said Greg Goebel, president of DealerStrong. “I advise any Dealer Summit attendee who has an interest in launching or improving a BHPH operation to take notice.”

Kerr managed BHPH dealerships in two different states and served as the general manager of a General Motors dealership before joining NCM Associates, where he serves as a trainer and 20 Group monitor.

His session, “Building BHPH Wealth in a Dangerous Compliance Landscape,” will begin at 11:30 a.m. on Wednesday, May 4. He is expected to explain how properly planned and managed BHPH operations can serve as a hedge against the vagaries of the economy and the subprime market.

“Many attributes that make us great car guys and gals on the retail side are the very things that lead to our demise in the BHPH business,” Kerr said. “To truly be successful, you have to understand and apply best practices for the BHPH model.”

Registration for Dealer Summit is open at the event’s website. Dealers who register by April 1 will enjoy a $100 early-bird discount. For information about exhibition and sponsorship opportunities, contact show chair David Gesualdo via email hidden; JavaScript is required or at (727) 947-4027.

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Tom Hudson Joins Dealer Summit Roster


TAMPA, Fla. — Prominent consumer finance attorney Thomas B. Hudson has agreed to speak at the upcoming Dealer Summit, organizers said Wednesday. The event will take place May 3–5, 2016, at the Sheraton Riverwalk Tampa Hotel. Hudson’s session, “Subprime and BHPH Dealers: How Regulators Have Changed Your Business Model,” will begin at 2 p.m. on Wednesday, May 4.

“Tom Hudson is universally admired as a dealer advocate and unwavering voice of reason,” said Greg Goebel, president of DealerStrong. “We couldn’t have asked for a better speaker to tackle this important topic.”

Hudson is a partner in the Washington, D.C., office of Hudson Cook LLP and one of the automotive industry’s foremost legal minds. He a frequent speaker and prolific writer, authoring a number of legal guides and publications and serving as a regular contributor to Auto Dealer Today and F&I and Showroom magazines.

Hudson is expected to analyze recent enforcement actions by federal regulators and their effect on automotive finance, including special finance and the buy-here, pay-here (BHPH) segment. Dealers must be willing to adapt to a “new business landscape” and change their business models, he warned, or face legal action that could cost them their livelihoods.

“There are two kinds of dealers in the world — those who know that the regulatory ground has shifted beneath them and those who don’t,” Hudson said. “Dealers need to understand and conform to the new rules or get out of the business before the regulators force them out.”

Registration for Dealer Summit is open at the event’s website. Dealers who register by April 1 will enjoy a $100 early-bird discount. They will also have access to several pre-show activities, including F&I Think Tank and Jim Ziegler’s Profit Masters.

For information about exhibition and sponsorship opportunities, contact show chair David Gesualdo via email hidden; JavaScript is required or at 727-947-4027.

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Rising Vehicle Supply Benefiting BHPH Dealers


Vehicle supply is no longer an issue for special finance dealers, but finding a finance source willing to lend on these older, high-mileage vehicles is. The situation, said Ricky Beggs, analyst with automotive research company Black Book, is playing right into the hands of the buy-here, pay-here (BHPH) segment.

The subprime segment continues to replace the approximate 750,000 units lost during the federally mandated Cash for Clunkers program in 2009, but the age and amount of miles on vehicles coming back to the market has created a domino effect that will hamper the efforts of new-car dealers.

“The quality of those trade-ins is at a different level than what we’re accustomed to,” Beggs said. “At the time (Cash for Clunkers-era), people didn’t trade for three to four years during the tough economic times. Now that they’re coming back into the marketplace, the vehicles they’re trading in are two, three, four years older, which means two, three, four years’ worth of more mileage — maybe 40,000 to 60,000 more miles than what would have gotten traded in three or four years ago.”

Beggs believes the industry is on track to sell about 1.5 million additional units in 2012 than in 2011. He also believes that 60 percent of those new-vehicle sales will involve a trade-in, which Beggs said will equate to about 900,000 vehicles landing back on dealer lots. Given the decline in quality of trade-ins, this situation could pose a costly problem for franchised dealers, who will be forced to make those vehicles available to special finance and BHPH dealers through the wholesale market.

The problem is traditional financing sources are unlikely to lend on cars with more than 100,000 miles or on models older than 2005. The only exception is diesel cars, which Beggs said lenders view as having more engine-life remaining than normal gasoline-engine cars.

Beggs said BHPH dealers also will benefit from falling wholesale prices for these high-mileage vehicles. In 2009, he noted, the Cash for Clunkers program caused wholesale prices to jump from $2000 per car to around $4,000 and $5,000. This year, he expects wholesale prices on these vehicles to fall to around $3,000.

“This gives the buy here, pay here guys the chance to either: make a little more gross (profit) or they will be able to sell a few more cars because they’re not as expensive,” he said.

Beggs, however, said the trend should reverse in upcoming years. “I think we’ll see this pattern continue in the next year. Then, in 2014, we’ll see people get back on a more typical trading pattern,” he said, adding that the industry should realize a SAAR of 16 million units by 2015, “unless the economy continues to struggle, but I don’t see that being the case for that long of a period.”

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Spireon Releases GPS Tracking Buyer’s Guide for BHPH Dealers


KNOXVILLE — Spireon has developed the industry’s first GPS vehicle tracking buyer’s guide for dealers who are new to the buy-here, pay-here (BHPH) segment and who are interested in expanding their loan portfolios, protecting their valuable assets and mitigating their risks.

The buyer’s guide provides an introduction to GPS technology and its advantages for dealerships implementing BHPH processes. It explains how to maximize the return on GPS vehicle tracking investments and the opportunities available in the subprime auto loan market.

The guide includes an overview of GPS technology; benefits of GPS growing dealership business; best practices on choosing the right GPS solution and provider; key features to look for in a GPS solution; and a GPS provider scorecard and checklist to help in the decision-making process.

“After reviewing the new GPS Tracking Buyer’s Guide, we were able to understand the ins and outs of how GPS devices help the BHPH market, and it helped us really make sure we were choosing the right partner for our business in this space,” says David Pinkerton, owner of Kingston Pike Motors. “This is a must-read for all newcomers to the BHPH market or for those who aren’t using GPS devices yet.”

David Meyer, executive vice president of Spireon, added: “We are committed to educating dealers on new ways to improve their profits and operations. This is why we developed the industry’s first GPS Tracking Buyer’s Guide, to help dealers understand the benefits and best practices of using these devices and also educate them on the importance of selecting the right provider for them.”

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Calif. BHPH Bills Clear Hurdles


SACRAMENTO — The three legislative proposals aimed at setting new restrictions for California’s buy-here, pay-here dealers passed out of their respected houses of origin this week, with the Assembly passing two of the bills on Tuesday and the Senate passing the third bill two days later.

Assembly bills 1447 and 1534 were referred to the Senate Rules Committee after passing the Assembly by a majority vote. The third bill, SB 956, was approved by the Senate by a 23-12 vote on Thursday and was heard by the Assembly the same day. 

“The rules committee looks at each measure and determines where they’ll need to be heard and we refer them to the appropriate policy committees,” said Jane Brown, committee assistant to the Senate Rules Committee.

All three bills, which faced a June 1 deadline to make it out of the respective houses of origin, must pass the policy committee level by July 6 and both houses by Aug. 31. Governor Jerry Brown will then have until Sept. 30 to pass or veto the bills.

If passed, AB 1447, introduced by Assemblyman Mike Feuer (D-Torrance), will require that BHPH dealers provide a limited warranty for all major components on vehicles sold. It will also implement new disclosures when ignition shutdown technology is present in a vehicle.

Assemblyman Bob Wieckowski (D-Fremont)’s legislation, AB 1534, mandates that dealers display a window sticker with the reasonable market value on all vehicles for sale, among other requirements.

Senate Bill 956, proposed by Senator Ted Lieu (D-Torrance), would lower the cap on interest rates from 30 to 17.25 percent, which would become the lowest cap in the nation if the measure is passed.

Buy-here, pay-here dealers caught the attention of state lawmakers last November after the Los Angeles Times published a series of articles critical of the segment. The three lawmakers introduced their bills in January, about four months before the Consumer Financial Protection Bureau announced its interest in learning more about the BHPH industry.

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Calif. Legislators Seek New Rules for BHPH


SACRAMENTO — California State Assembly Member Mike Feuer (D–Los Angeles) and State Sen. Ted W. Lieu (D–Torrance) have proposed legislation that would introduce new rules designed to “rein in abusive practices” of buy here, pay here dealers statewide. The announcements followed a series of articles by Los Angeles Times reporter Ken Bensinger that sought to shed light on used-car lots and the customers who frequent them.

“This industry preys on people who have no other options for getting a car,” Feuer said. “In many parts of our state, auto travel is the only way for parents to get to work on time, or to pick their kids up from school. Instead of helping Californians get back on their feet by providing needed transportation, these dealers are promoting an endless cycle of debt and joblessness.”

Feuer’s bill, AB 1447, would require dealers to display each vehicle’s price on the vehicle itself, prohibit dealers from requiring that customers pay them in person, prohibit dealers from contacting a buyer’s references once a sale is completed, and prohibit them from installing payment assurance devices, including GPS tracking and starter interrupt devices.

A second proposal from Sen. Lieu would require dealer financiers to obtain a California Finance Lender’s license, cap auto loan interest rates at 17.25% and introduce mandatory grace periods for repossessions.

The announcements drew swift condemnation from Kenneth Shilson, founder of the National Alliance of Buy Here, Pay Here (NABD) dealers, who described Feuer’s bill as “the most intrusive proposal I have ever seen.”

“They’re looking to regulate BHPH and disallow payment devices,” Shilson said. “That runs to the perception that the transaction is abusive and the device is an invasion of the consumer’s privacy. It’s not. Lenders have the right to protect their collateral.”

Shilson said Bensinger contacted him about a year before the first article was published. He said he was dismayed to find that the series was “totally one-sided,” focusing on hard-luck stories from BHPH buyers and the high interest rates and multiple repossessions inherent to the segment. The series gave little voice to dealers, Shilson said, noting that high interest rates are a reflection of the risk each dealer is taking on when financing “unbankable” customers.

Last year, at the NABD’s first East Coast dealer conference in Atlanta, Shilson met with a senior member of the newly formed Consumer Financial Protection Bureau (CFPB). The member will be in charge of the agency’s installment lending division and attended the conference on a fact-finding mission.

“He told me that what he took away from the Times series was that BHPH is providing transportation that the government can’t,” Shilson said. “In other words, if you can’t qualify for a traditional loan, we don’t have the public transportation infrastructure to get you to work.”

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