Buy Here Pay Here Capital Region - Find Cheap Used Cars
The idea of Buy Here Pay Here (BHPH) financing at auto dealerships is simple. Generally, sales and collections both take place at the same facility. The dealer and buyer first arrange a loan in-house at the dealership. It's quite common to explore financing before even looking at cars, then going to check out cars with a monthly payment range in mind. After the buyer purchases the automobile (buy here), she or he then returns to the dealership to make weekly or bi-weekly payments (pay here), usually by cash or check. Some dealerships offer BHPH financing as an option, while others require it exclusively.
BHPH financing is becoming increasingly common in the auto sales industry and there are many reasons why. An auto dealership that chooses to offer BHPH financing can suddenly get in touch with a fresh pool of potential auto purchasers. BHPH financing allows dealerships to sell cars to individuals with poor credit history who would not otherwise have the ability to purchase a vehicle. The amount of consumers with poor credit has recently increased, especially with the current state of the economy and in the wake of the subprime mortgage crisis.
BHPH financing provides these consumers with several incentives to purchase vehicles. First, dealerships can report positive buyer behavior to credit reporting agencies, which is appealing to buyers with poor credit history. Such a practice also motivates purchasers to make timely payments. Second, BHPH dealerships tend to be flexible with accepting trade-ins since it is more readily found buyers for those cars. Accepting a trade-in vehicle that other dealers might not could be a great selling point. In sum, dealerships that offer BHPH financing can gain an edge over competitors that don't
Perhaps the best aspect of BHPH financing is that it offers a lot of flexibility - not just in payment options but also in overall management style and decisions. Because of that, a dealership can smoothly make the transition to BHPH financing. There are lots of resources that provide detailed information about how to setup a BHPH dealership effectively. Jim Rhoads, the president of a consulting firm that are experts in start-ups in the BHPH field, highlights a few of the steps to starting and managing a successful BHPH operation. Topics include everything from understanding the business, to deciding on the best BHPH software, to collection efficiency.
Once you choose to offer BHPH financing, you should use marketing techniques to your benefit. BHPH financing's best selling point is that it is possible to buy even with poor credit history. Signs that emphasize that benefit are invaluable for BHPH dealerships. These signs are especially important because many people don't know what BHPH financing is. A sign as easy as one that says WE FINANCE may encourage buyers who have previously been turned down because of credit problems. Effective advertising allows a BHPH dealer to maximize its potential.
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