As part of your business plan, you need to determine your exposure, or your cash in deal CID. When starting a BHPH department, it is best to have at least 24 months worth of cash up front to get going. One of my clients has a BHPH location that does 20 deals a month.
Underwriting is not an exact science, even though there are several software programs available to help make these decisions more scientific. The first thing a BHPH dealer needs to do is find out if a customer can afford a new payment. Just make sure to base everything off of net income. Additionally, a lot of dealers do not factor overtime into income calculations unless a customer has a long-term job and a proven track record of receiving overtime.
Email Phone I would like info on the following: Leave this field empty: Your Comment Please note that comments may be moderated. Required Leave this field empty: Article News Popular Stories. Plus the dealer keeps collecting weekly payments! He is in the business of collecting payments also called notes. Hence the name, Note Lot , not making repossessions. Your goal is to get many people paying you each week. After you sell the car, you have to get them to keep paying you that is the tough part of the business.
One reason BHPH lots are so profitable is because this is truly a vertically integrated business. You are the dealership and finance company. You make ALL the profit on the deal, the front end gross and the back end gross.
Of course, there are greater risks involved but the financial rewards can be outstanding to say the least. If there two common reasons people failed in the BHPH business is 1 lack of cash and 2 lack of a disciplined collection system. Particular attention given to personnel, underwriting, collections, and financial management.
The cash flow is incredible. And the financial risk is relatively low. You get all your money back! You will need a great location with lots of traffic. Have an average inventory of 30 — 40 cars. This is BIG business. Remember though, once you run out of money, you are out of business. You will finance everything. Look at them straight in the eyes with a serious tone and voice and face.
It can be dangerous! People need their car to get to work and get to the grocery store. You are taking their ride! In a HOT market, you might only be able to sell it at twice the price you paid. Some wholesalers specialize in visiting large dealerships asking the used car sales manager if they have any note cars in the back they want to sell. The wholesaler buys the car and sells it to a note lot for a couple hundred dollars profit per car.
And then the note lot dealer doubles and even triples the price and finances the deal. You do need a dealer license! Your main focus needs to be on Location, Location, Location. The dealer license is not big deal if you are going to get a car lot! To reduce cost, let a mechanic rent out a portion of your lot for his business. He will do all your mechanical work for free in exchange for free rent. All you have to do is buy the parts! Parlay your profits until you have an inventory of 10 cars.
Keep buying and selling until you have enough money to afford a decent location! You simply buy cheap cars from the used car sales manager at dealerships. Always be on the lookout for cars.
So you’ve decided to give it a go. The first thing you need to do is create a business plan for your new buy-here, pay-here operation. Special finance trainer provides the five things your business plan must have.
Shilson says it's not easy to borrow money to get into the buy-here, pay-here business. Dealers must have excellent net worth, a solid business plan and a .
buy here pay here car lot: Car Dealer (Used and New) Sales In addition to your state dealers license, you will need the following: Car Dealers or Auto Dealers, Sellers of automobiles, used or new, need a sellers permit and a business license. Mastering Buy Here Pay Here August , Auto Dealer Today - WebXclusive you have to do it. I look at it as if I’m funding my own retirement plan. It’s a “mutual fund” where I fund the financing of customers’ vehicles, and they fund my future financial security. BHPH can and will be a very profitable business venture, should.
Starting a buy here, pay here dealership can be a lucrative business, since your target market will be consumers who expect to pay higher interest rates. Determine your capital for buying the initial inventory. Howdy (said in my best Texas accent)! This $ Buy Here Pay Here Manual will help you add “buy here pay here” to your profit model without screwing it up. This Manual is pages & the only one of its kind in the country. The .