Used car values slumped nearly 7 percent in the third quarter of 2022, according to Cox Auto, and at the same time, consumers are being stretched thinner when it comes to their monthly budgets. It doesn’t portend well for buy here-pay here dealers, who may have gotten used to being able to repo a unit, only to have it worth more than when they sold it.
Everyone knew that wouldn’t last, but as Federal Reserve is rapidly increasing interest rates and capital is more expensive, it’s a wrong time to see increasing late payments, reductions in recency, and defaults resulting in repossessions.
Cox reported last month that after two years of declines, the amount of repossessed vehicle volumes flowing into wholesale channels is expected to tick up to 1.2 million in 2022 and remain at that level in 2023 before climbing to 1.3 million in 2024 and 1.5 million in 2025. It may mean greater selection for that BHPH unit in the future but will mean some pain for many, at least in the short term.
One thing we’ve learned from decades of experience in automotive finance is that you can only control what you can control. You must respond, but it shouldn’t become all-consuming. Now is the time to focus on what matters.
Because we partner with dealers and share the many risks that come with the BHPH business, we have a vested interest in their success. Rising fed rates have made capital more expensive, but because of our unique program (*See details below.) we have not had to change our program at all.
What we have done is help dealers with their underwriting. We work with you to make every deal a success. It’s an unattainable goal; we understand that but we do all we can to keep accounts current and the customer in the car.
Collections are critical in our business. We insist that our collectors develop relationships with the client. We are firm but work with customers when practical and when we see honesty and sincere effort.
In this market, consumers, especially the BHPH customer, need their vehicles. It’s the difference between having a job or losing one. It’s the difference between getting to a doctor’s appointment or missing it. We make sure that YOUR customer understands we are on THEIR side. We make sure the customer remembers who sold them their vehicle and that we represent you, so you get the repeat and referral business.
We constantly train our collectors. Our collections managers carefully review the data and point out each collector’s strengths and weaknesses. They are incentivized based on solid performance and hitting their goals.
Despite headwinds in the marketplace, there is calm to be found by partnering with a leader in the BHPH Capital industry. We share your goals because your success directly affects ours.
* Glenview Finance Program Details
Advance: 50% of the amount financed/current principal balance
Dealer Payment Share: 40% of every payment collected.
Once paid in full, the dealer receives 90% of principal and 40% of the interest.
Amount Financed: Maximum of 250% LTV (Based on NADA Clean Trade with a Value >$3,000)
Term: 48 Months (54 with Glenview Gap and Warranty)
Age of Vehicle: No Restrictions
Mileage: No Restrictions