Buy Here Auto Lots 1.0
Cash 4 Cars Akron is back with the 1st of a two-part segment concerning “Buy Here, Pay Here” (BHPH) auto dealerships. First, an overview of whom we are! We are a scrap my car service provider that allows you to sell an old car. We are among who buys junk cars and who will buy used cars for scrap. Our scrap my car program allows you to sell an old car for fast cash in Summit, Medina and Portage Counties. We buy any car regardless of condition and are referred to a place that will buy used cars for scrap in Peninsula, Granger Township, and the old Rolling Acres area. Are you wondering who buys junk cars in Medina, Rootstown, or the Portage Lakes? Perhaps you seek to sell a car for scrap and need to locate who buys junk cars in Stow, Lakemore, or Clinton? Is your car: broken down, damaged, wrecked or totaled? Yes, we buy any car!
This segment will focus on (4) key topics within the BHPH industry as follows:
- What differentiates them from more traditional auto dealers?
- Who is their target customer market that the serve?
- How is the process structured at a BHPH?
- What are the overall (broad) positives or negatives from the customer’s standpoint?
Russ Heaps of autotrader.com paints a fairly accurate picture of what make BHPH shops different as follows: “BHPH financing means that you obtain the loan and make payments on the vehicle at the dealer where you buy the car. It is a ‘one-stop shop’ process since the auto dealer is also the financier. Because loan decisions are made by the dealer, who wants to sell a car, approval is nearly guaranteed. If you have an address and steady income, your chances for approval are good. The dealer’s will probably make as much profit on the financing as they do on the car itself. You can expect a double-digit interest rate and it’s helpful to find a dealer close by since rather than mailing a payment, they may require you to make weekly or bi-weekly payments in person. Some traditional auto dealerships now offer BHPH financing. Rather than picking a car and then talking financing, a BHPH dealer will 1st qualify the customer to determine how much to lend. Vehicle choices will probably be limited.” The full article is available here.
The BHPH customer has a common denominator—lousy credit. An article by Peter Salinas on dealershipbusinessjournal.com titled ‘Just Who Are My BHPH Customers?’ attempted to define the demographics: “The characteristics of the BHPH customer? Well, they aren’t really poor because they sometimes have 2 or more people in the family who are working. And they all have credit issues or don’t have credit at all. They are both genders and are all ages. They tend to “job hop” and move their residence more than most. They are all ethnicities: White, Black, Hispanic, and European. They tend to be single parents, in the cities. Scott Carlson, CEO of AutoZoom, who produces buy here-pay here scoring models, says BHPH customers come from a large swath–with similarities. A common thread is credit issues; they don’t pay bills on time, or have had bankruptcies & repossessions. Typically are not well-educated & are often frowned upon by employers, relatives etc… These people get jobs that don’t pay well.”
According to a BuyHere55.pdf from ‘The State of Lending in America & its Impact on U.S. Households’, the Subprime Analytics/National Association of BHPH Dealers these loans had these characteristics from 2006-2011:
- Average number weekly of payments: 132 (meaning roughly 2.5 years was the loan term)
- The average week payment was $84. ($336 per month, totaling over $11,000, plus their down payment)
- The APR on these loans were about 24%
- The average amount financed was 9K
- Average down-payment around $1,000
- Approximately 26% of these loans were written off and 20% were delinquent/in collections
The full report is available at http://www.responsiblelending.org. The BHPH industry is certainly near the bottom of an already somewhat troubling industry. In today’s market, a low-end compact such as the Nissan Versa is around 15K. A middle of the road Chevy Malibu is around $21K, meaning a 60 month loan @ 5% will be $400 per month. Over the 5-year span you will incur costs of fuel, insurance, oil changes, tires, brakes, washes and a battery. Essentially a new “average” car is about $500 a month. What is more disturbing is that the auto loans are commonly be extended to 72 and 84 month terms.
Looking to sell a car for scrap?
At Cash 4 Cars Akron we buy any car in virtually any condition throughout Fairlawn, Cuyahoga Falls, and Springfield Township. We are now who buys junk cars in both Portage and Medina County! To sell a car for scrap in Bath, Stow, or Lakemore—give our scrap vehicle buyer a call. We now buy used cars for scrap in Wadsworth, Ravenna, and Rootstown. Residents in Green, Fairlawn, and Cuyahoga Falls with an old clunker to junk are encouraged to call (330) 271-6464. We are ready to buy scrap cars in the Portage Lakes, Norton, and Brimfield. There are scrap yards that buy cars, but they aren’t as eco-conscious of an organization. Our buy my junk car program reduces water and land pollution, as landfills are a major source in hurting the natural environment.
