27 Steps to Starting and Managing a Successful
Buy-Here, Pay-Here Operation

   Step #1: Understanding the business (including challenges and pitfalls)
   When run properly, the buy-here, pay-here (BHPH) business is very profitable. Even dealerships that are poorly managed can be very profitable for a while. If you are just entering or just contemplating entering the business, it is important to recognize right away that generating profits will not be your greatest challenge. Provided you are in a market with a sufficient customer base, you are likely to generate net profits (and be taxed accordingly). Let's face it, as a BHPH dealer you are in the business of financing individuals who are at a disadvantage. Most of the buyers who visit a lot that displays signs such as We Finance and Easy Terms have limited credit options and they know it. Therefore, you can set a relatively high selling price and interest rate and meet with very little resistance on the lot. Great business, right? Absolutely, but not so fast!
   For those coming from conventional retail, please read the following sentence very carefully, perhaps even more than once. The BHPH business is not the car business! It is a finance business. That is not to say that you won't be able to use some of what works for you in the car business, but there are far more differences than similarities, so don't be afraid to ask for help. New car dealers in particular who bring a new car mentality about sales and gross often suffer in BHPH. I will point you to several industry resources in some detail in a future issue.
   When BHPH dealers seek my services because they are struggling, I find that problems arise from two main sources. The first is lack of appreciation for the need to develop collections systems and hold the staff accountable for executing them. The other is good old-fashioned greed. Familiar with that human downfall? Combine that with an oversized ego and you have a recipe for disaster in BHPH. Let's examine each problem area more closely.
   You already know that collections are a crucial component in the business of financing in-house. You probably also recognize that projecting cash flow is vital to your success. So, you may only need to determine what collection percentages are reasonable to expect and what systems can help to achieve them. I'll cover that in more detail in future issues. For now, just know that the accountability factor is an important key to banking more of the profit you put on the books.
   On the second point, greed and ego lead to problems in BHPH because those traits can influence selling prices, which influence gross charged and taxes assessed on profits that have yet to be collected. Selling prices also impact length of contracts which is directly related to charge-off losses and the most overlooked issue of customer satisfaction. Dealers who ignore the importance of customer satisfaction aren't in this business very long. If you pile it on with BHPH buyers, you may be the one who suffers. Of course, you need profit and you deserve plenty of it. But there is such a thing as too much in this business.
   Having an ego is nothing to be ashamed of. We all have some of it. I only bring it up because it is what drives many of your business choices, such as quality and cost of cars you carry and the expense you will incur in areas such as the size and appearance of your facility  numbers that have a dramatic impact on your cash flow and the time it takes for you to reach that all-important positive cash level. When making these choices, I urge clients to decide based on the wants and especially needs of their target customers. So it may help to check your ego at the door as they say.
   In the series of articles to follow in future issues, I will speak to the other hazards and overlooked opportunities in this business. Until then, seek those who can provide an independent perspective and listen! Buy-here, pay-here is a great business when you learn to avoid the potential pitfalls!
   By Jim Rhoads, Jim Rhoads is the president of Four R Consulting, LLC, a Texas consulting firm specializing in start-ups as well as ongoing training, consulting, and analytical services in the field of buy-here, pay-here. Contact this writer at jrhoads@bhphconsulting.com


   World of Special Finance Magazine, eNewsletter: News & Updates Vol 3 Iss 22

Advanced Business Computers of America, Inc. (ABCoA)  Jacksonville, Florida

   Leading auto and finance industry software provider, ABCoA, has recently released BookItOut. BookITOut provides more information, more accurately than any existing used auto pricing provider.
   By utilizing a national database comprised of used auto dealers, BookItOut collects sales and reconditioning costs daily and at their real values.  Other unique features of this trademarked and patented process include inventory and market trend analysis as well as VIN decoding and an auto locator. Unlike the current industry pricing standards, this service provides the purchase, wholesale, retail and reconditioning values on several levels.  These levels include pricing nationally, regionally, by state, by city and by zip code.
   BookItOut is designed to provide auto dealerships, insurance companies, banks, auctions and warranty companies with the same information to help them conduct their business with greater accuracy and turnaround. As a BookItOut subscriber, companies and buyers have the option of a mobile compatible application for handheld devices, thus adding to the ease and convenience of BookItOut. 
   For more information on how to simplify your pricing process and maximize your profits, please visit www.bookitout.com or call Evie at (800) 526-5832 ext 211.

   World of Special Finance Magazine, eNewsletter: News & Updates Vol 3 Iss 2

Online Used Classifieds Outpace Print Ads

   WESTLAKE VILLAGE, Calif. (May 26, 2006) -- Turning to the Internet to research and select a new or used vehicle to purchase has been gaining ground with consumers with of late. The evidence of this increasing trend can be found in J.D. Power and Associates 2006 Used Autoshopper.com Study, which revealed that more than twice as many vehicle buyers are sourcing online classifieds versus newspaper and magazine classifieds as the place where they found their next purchase.
   Over the past five years, the percentage of buyers who discovered their used vehicle through a traditional newspaper or magazine classified ad dropped from 14 percent in 2002 to 7 percent in 2006. Over the same period, buyers who said they found their next vehicle through an online classified doubled from 8 percent in 2002 to 16 percent in 2006.
   "Print continues to serve an important purpose in marketing, but its role in the area of classified listings is diminishing quickly," explained Min Cho, senior analyst at J.D. Power. "The domination of the Internet over print in the used-vehicle market will only increase as today's younger buyers become a larger buying force in the market. Buyers under the age of 35 are more than four times as likely to be led to the vehicle they purchase by information found online than by print classified ads."
   This year, 59 percent of used-vehicle buyers said they turned to the Internet during their shopping process, which is up from 53 percent in 2005. Moreover, 80 percent of used vehicle purchasers said they now have access to the Internet, a 4-percent increase from 2005. J.D. Power executives attributed the increase to buyers 60 years old and older.
   "It is now cheaper than ever to own a computer and to have Internet service, which is why we're seeing such significant shifts in the number of consumers using the Internet to shop for used vehicles," said Cho. "Once shoppers are online, they are finding that automotive Web sites are providing better quality and quantity of information about used vehicles.
   "The impact can be felt in what shoppers buy, who they buy from and what they're willing to pay for their vehicle," he continued. "Better search tools and applications are allowing Web sites to 'listen' to shoppers better and more quickly match them up with appropriate vehicle considerations."
   According to J.D. Power, independent Web sites are continuing to garner the highest visitation rates among used-vehicle buyers at 90 percent. These buyers are specifically turning to independent sites for pricing, inventory and reliability information, executives pointed out. Many independent auto sites also offer online classified listings powered by sites such as AutoTrader.com or cars.com, executives added.
   Looking at dealership sites, J.D. Power said they attract large numbers of used-vehicle buyers, too. In fact, significantly more used-vehicle buyers who use the Internet visit dealership Web sites than do new-vehicle buyers, 64 percent versus 48 percent, respectively.
   While automaker sites don't offer as much information about vehicles made in previous years, they produce high visitation rates among used-vehicle buyers, executives noted. This could be due to the fact that 41 percent of late-model used vehicle buyers consider one or more new vehicles before they buy, executives surmised.
   "In general, manufacturers are not doing all that they can to facilitate the very common practice of comparing new and used vehicles," Cho said. "Manufacturers have an opportunity to demonstrate that the vehicles they made a few years ago are still performing well, thus supporting residual values.
   "They also have an opportunity to demonstrate why their new vehicles are even better than the ones they replaced, supporting new-vehicle sales," he said. "When manufacturers do more to support the shopping process, visitation to their sites will increase."
   J.D. Power said its 2006 Used Autoshopper.com Study was based on responses from 12,317 used-vehicle buyers who purchased a pre-owned 2001-2006 model.

   J.D. Power, Online Editor via Email, Auto Remarketing Today, May 26th, 2006

BBB Offers Help to Protect Customer Info at Small Businesses

   ARLINGTON, Texas (March 30, 2006) -- To assist small businesses in complying with the Gramm-Leach-Bliley Act and related Safeguard Rules, the Better Business Bureau has launched a customer data toolkit called Security & Privacy -- Made Simpler at www.bbb.org/securityandprivacy/.
   BBB executives said they introduced the toolkit to "demystify the complexities of data security and give small businesses a non-technical roadmap to securing their customer data and their employees' data, too."
   The BBB said it has been hearing from many small business owners who are not sure how to protect their data and comply with the Gramm-Leach-Bliley Act. The act requires that financial institutions ensure the security and confidentiality of customer data. As part of the implementation of this act, the Federal Trade Commission issued the Safeguards Rule.
   According to the FTC, "The Safeguards Rule applies to businesses, regardless of size, that are 'significantly engaged' in providing financial products or services to consumers. ... In addition to developing their own safeguards, financial institutions are responsible for taking steps to ensure that their affiliates and service providers safeguard customer information in their care."
   Full compliance with the act was required by July 1, 2001, and the SafeGuards Rule became effective May 23, 2003, but for new dealers or those who may still be struggling to come under compliance, the BBB said it partnered with nationally-recognized security and privacy experts to create a toolkit to help small business owners manage security and privacy challenges.
   The Gramm-Leach-Bliley Act states that financial institutions must comply with the Safeguard Rules and protect nonpublic personal information. While some dealers may believe this doesn't include them, it does, according to Keith Whann, executive counsel for the National Independent Automobile Dealers Association.
   "The definition of a financial institution has been broadly interpreted and will, in most cases, include motor vehicle dealerships," Whann wrote in his report titled How to Comply with the Gramm-Leach-Bliley Act.
   "Motor vehicle dealerships that fall under the definition of financial institution are prohibited from disclosing certain personal information about their customers to third parties unless they satisfy notice and opt-out requirements."
   Going on, Whann explained, "For example, if your motor vehicle dealership obtains a credit application from an individual and evaluates the information provided in the application to determine whether or not the individual qualifies for financing, you have provided a financial product or service. A motor vehicle dealership also provides a financial product or service if it provides a copy of the application or the information contained therein to another lending institution."
   Whann said the information covered under the act and Safeguard Rules includes data a customer provides on an application to get a loan; account balance information, payment history and credit card information; the fact that an individual has been a customer or has obtained a financial product or service from the dealership; information the consumer provides that a dealer or his agent would otherwise obtain in connection with collecting on or servicing a credit account; any data collected through an Internet 'cookie;' and any information from a consumer report.
   "The only time you are not required to comply with the G-L-B and FTC's Final Rule notice and opt out requirements in connection with the sale or lease of a motor vehicle and/or related products or services from you is if the purchaser/lessee pays the total amount due via a credit card or with cash (provided that you do not sell a motor vehicle service contract or guaranteed automobile protection (GAP) product)," Whann continued.
   According to the FTC's Facts for Business, "The Safeguards Rule requires financial institutions to develop a written information security plan that describes their program to protect customer information."
   To assist small businesses in successfully completing the plan, the FTC provided a list of items which should be covered, including:
   1. Designate one or more employees to coordinate the safeguards;
   2. identify and assess the risks to customer information in each relevant area of the company's operation, and evaluate the effectiveness of current safeguards for controlling these risks;
   3. design and implement a safeguards program, and regularly monitor and test it;
   4. select appropriate service providers and contract with them to implement safeguards; and
   5. evaluate and adjust the program in light of relevant circumstances, including changes in the firm's business arrangements or operations, or the results of testing and monitoring of safeguards.
   Under the Safeguards Rule, customer data kept on file needs to be secure, including network and software design, information processing, storage, transmission, retrieval and disposal.
   In its new downloadable toolkit, the BBB explained, "Data security and privacy management may appear complex and overwhelming, but you really don't need to become a privacy expert to manage it. All you need to do is acquire a basic understanding of the issues and the business tools that will protect your customers and your business."
   However, BBB executives and Whann both caution that their tips are not intended to provide specific legal advice.
   To view a copy of the Safeguards Rule, visit www.ftc.gov/privacy/privacyinitiatives/glbact.html. To obtain a copy of Whann's report, visit www.niada.com and click on NIADA Publications in the left hand column.

   Jennifer Reed, Online Editor via Email, Auto Remarketing Today, March 31th, 2006

AutoTrader.com Introduces Free Educational Site

   ATLANTA (Feb. 20, 2006) -- On Friday, AutoTrader.com announced the launch of Advertising Essentials, a free interactive education site designed for dealers at advertisingessentials.autotrader.com.
   Company executives highlighted the fact that the online educational modules can be downloaded to mp3 players to make learning more convenient for dealers.
   AutoTrader.com's Advertising Essentials was designed to teach dealers practical skills and tactics to effectively merchandise their vehicles on the Internet and maximize ROI, according to executives. The modules cover writing good copy, taking good photos, the important of pricing and reviewing listings to improve results, executives said.
   They went on to explain that the site is training-focused, as it quizzes users in order to test and reinforce the information being taught. All concepts discussed in the training can be applied to advertising on all third-party Internet sites in addition to dealer Web sites, executives noted.
   "We continue to see a need in the marketplace for increased Internet marketing and sales skills and we are committed to providing dealers with compelling training on proven techniques to merchandise their cars and reach in-market car shoppers," explained Chip Perry, president and chief executive officer of AutoTrader.com.
   "Advertising Essentials training will help dealers achieve a higher level of sales and profits from their Internet advertising, regardless of the sites they are using," he added.
   In addition to announcing the launch of Advertising Essentials, the company also said it is the new title sponsor for the "DRIVE" series produced for ESPN. The show is now in its fourth season and was formerly known as "Road Trip to the Auto Shows."
   The shows will feature highlights of the 2006 LA, Detroit, Chicago and New York auto shows and is scheduled to begin airing Feb. 18, at 6 p.m. on ESPN.
   "As a longtime AutoTrader.com junkie, I am really excited about our new partnership; AutoTrader.com is my No. 1 destination on the Internet when I shop for a car," said C. Van Tune, the host of AutoTrader.com's 'DRIVE.' "And, because I typically buy four or five cars a year (and advise my TV and radio audience on new models daily), I utilize their excellent site resources virtually every day."
   Scott Tracy, director of strategic marketing for AutoTrader.com, added, "This partnership with the DRIVE series really connects us to our key audience and gives consumers exciting and timely coverage of new vehicles, custom aftermarket products and more. AutoTrader.com will now have a great opportunity with each show to reach consumers and drive traffic to our site's nearly three million vehicles."

   Jennifer Reed, Online Editor via Email, Auto Remarketing Today, February 20th, 2006

Flagship Credit Corporation, New Automobile Finance Company, Launches With An $81 Million Investment Led By Equifin Capital

   Private equity firm partners with veteran management team led by Michael C. Ritter to establish non-prime consumer auto finance platform
   Chadds Ford, PA February 14, 2006 - Flagship Credit Corporation, a national indirect automobile finance company catering to the non-prime market, announced that it has raised $81 million in committed equity capital to fund the company's growth.  Equifin Capital Partners, a New York-based private equity firm focused on the financial services industry, sponsored the formation of Flagship and led the company's equity financing.
   Flagship, based in Chadds Ford, PA, is run by Michael C. Ritter and three other highly-seasoned senior executives, who collectively have over 60 years of industry experience.
   According to Ritter, Flagship's Chief Executive Officer, "Flagship will target markets in which our executive management team has longstanding relationships with franchised dealers.  We anticipate growing to nearly $1 billion in assets over the next five years, an achievable goal given that our management team has done this before while targeting the same market segment and utilizing a similar product."
   "Equifin Capital's investment strategy is to partner with proven management teams and build strong platform companies in attractive segments of the financial services industry," said Mani Sadeghi, a Managing Partner at Equifin Capital.  "We believe the $70 billion non-prime auto finance market presents especially attractive return opportunities and, given recent consolidation in the sector, a proven path to realizing franchise value." 
   Ritter is an experienced financial services executive, with a 24-year history of forming, acquiring, operating, and selling specialty finance companies.  He was formerly the President and Chief Executive Officer of a legacy entity also named Flagship Credit Corporation, which grew under his leadership to $500 million in annual originations in less than two years and was successfully sold to a national bank.  During his career he has also served as the Chief Financial Officer of Itochu International and as a senior executive of Copelco Financial Services Group. 
   "We have known Mike for over a decade and are confident that together we can capitalize on the opportunities in the sector," said Joseph Tomei, a Managing Partner at Equifin Capital. "We will be able to leverage Flagship's broad network of existing dealer relationships, proven credit management capabilities and the capital resources now committed to the company."
   The company's senior management team, consisting of Kevin O'Connell, Chief Credit Officer, Thomas R. Stillman, Chief Operating Officer and Kenneth Sicinski, Chief Financial Officer, has worked together for nearly two decades.
   For more information about Flagship, visit www.flagshipcreditcorp.com or call (610) 717-1900 or For more information about Equifin Capital, visit www.equifincapital.com.

   World of Special Finance Magazine, eNewsletter: News & Updates Vol 3 Iss 7

Automotive Sales to Individuals with Discharged Bankruptcies to Reach Record High

    Phoenix, AZ- Jan. 26, 2006-- Due to record filings the 2nd half of 2005, the Federal Bankruptcy Courts are publishing discharges at record rates. 
   According to the Administrative office of the U.S. Courts, 3rd and 4th quarters of 2005 set bankruptcy filing records at triple digit increases.  Filings were up to 542,002 for the 3rd quarter and 672,320 for the 4th quarter. 
   "We are beginning to see the 1.2 million BK filings from the end of 2005 mature into discharges", explained Robert Davies, President of Direct Marketing Associates, Corp. "Our OnlineBKmanager.com marketing system is delivering weekly discharges at record volume levels.  We anticipate this influx of discharges to completely enter the market during the next 5 to 10 months.  We know that nearly 450,000 of these individuals will purchase a vehicle within thirty (30) days of their discharge."
   Other Related News -
   Due to pressure from federal regulators, credit grantors have announced they are increasing minimum monthly payments on credit card balances from 2% to 4%. 
   "Some card holders could be devastated by the change," said Davies.  "Those consumers hanging on by a thread will not be able to handle this monthly increase.  If a consumer is living paycheck to paycheck and their minimum monthly payments go from $350 to $700 per month, this extra money may not be available in an already stretched household budget."  Bank of America has anticipated this scenario and has set aside an extra $130 million to cover projected losses from defaulting cardholders.
   "In short, Bankruptcies will not be a thing of the past anytime soon," concluded Davies. "Consumers will continue to over extend themselves and require the protection of the BK courts."
   Direct Marketing Associates, Corp.


World of Special Finance Magazine, eNewsletter: News & Updates Vol 3 Iss 5

Check For Flood Damaged Vehicles On-Line

   There's a new way to find out if a vehicle has been flood damaged.  The National Insurance Crime Bureau (NICB) has compiled a database of vehicles and watercraft affected by Hurricanes Katrina, Rita and Wilma.  The information in this database was gathered from a number of sources, including insurance companies, salvage yards and state and local authorities.  Through its website at www.nicb.com, you can check Vehicle Identification Numbers (VINs) and Hull Identification Numbers (HINs) free of charge as a public service to help determine whether a specific vehicle or watercraft that has come to the NICB's attention, was involved in either hurricane.
   It should be noted that the NICB's database does not attempt to determine the scope of the damage, if any, to any particular vehicle or watercraft, including the fact that some vehicles or watercraft on the list may have had no damage or very minor damage, while others had extensive damage and may no longer be safe to operate.  The NICB recommends that any vehicle or watercraft affected by a hurricane be thoroughly inspected by a competent mechanic of your choice prior to further use.
   Compiled from www.nicb.com

A publication of the FIADA Independent Dealer, December 2005, page 17

PIN: Captives Regain Some Ground

   WESTLAKE VILLAGE, Calif. (Jan. 3, 2006) -- After declining for three consecutive quarters, captives' share rebounded slightly as this segment of the finance industry regained some of its lost ground in the fourth quarter of 2005, explained Power Information Network executives.
   "A factor contributing to this recent increase in market share is an uptick in the percentage of extended term loans offered by captives," said PIN executives. "However, despite this increase, the captives' share is still down 22 percent from a three-year peak of 65.1 percent in the fourth quarter of 2004."
   In the fourth quarter, average-term lengths for the industry and captives climbed to 64 and 62 months, respectively, which PIN executives pointed out was the longest terms through the past 13 quarters.
   "The trend is being driven by downward pressure on monthly payments as vehicle prices rise," noted PIN executives. "Captives institutions have increased their offer of 66-, 72- and 84-month loans, while reducing 36-, 48- and 60-month loans, with 60-month loans reporting the greatest decline.
   "Interestingly, in the fourth quarter of 2005, one of every three new vehicle buyers who financed their vehicle through a captive provider opted for a 72-month loan, and the 72-month loan penetration rate is only 15 percentage points less than the 60-month penetration," executives continued.
   They also said captives have been increasing their mix of 84-month loans to remain competitive with the non-captives, which have recorded 5.8 percent of their business in 84-month loans during the fourth quarter of 2005.

  Email: ARToday@autoremarketing.com

NAF Offers Tips to Tap Into Hispanic Market

  By Jennifer Reed, Online Editor

  ATLANTA (Dec. 21, 2005) -- As the U.S. population of Latinos continues to grow, the importance of tapping into this market segment for dealers is climbing, and quite simply, it makes good business sense for the bottom line. However, some dealers may find themselves scratching their heads in confusion, as they need to learn how to accommodate and attract folks from a completely different culture to their showroom to be successful.

  To offer some assistance to these dealers, the National Automotive Finance Association hosted a workshop in Atlanta in early December, which honed in on ways to cater to the Hispanic population.

  Featured speakers at the event included John 'Hank' Held, senior vice president, corporate counsel and assistant secretary for Burt Enterprises; Brian Perry, general manager of Carriage Nissan; and Tom Hudson, prominent dealer attorney from Hudson Cook.

  While many aspects of the Latino culture is similar to that of the general buying public, some differences do surface, pointed out Perry, whose business has found ways to profitability reach this market.

  One of the first things he mentioned was that word of mouth is very important to Hispanics, especially those from the first generation.

  "If one person in a family has a good experience purchasing a car somewhere, then others from that family will go there," he explained.

  Even though Latinos who don't speak English fluently may prefer to bring a younger family who can along to the dealership, these consumers generally prefer dealing with a salesperson who speaks fluent Spanish.

  "It takes a good bit to gain their trust when dealing with a car," Perry noted. "Generally, a salesperson needs to spend at least an hour gaining a Hispanic consumer's trust. If you're going to deal with a lot of Hispanics, then find and hire someone born with Spanish as their first language."

  Speaking in general terms, he cautions that many Latinos may not think it an issue to borrow a brother's or cousin's social security number to apply for vehicle financing. So salespeople and finance personnel need to do their best to spot these folks, he recommended.

  As Denver has one of the fastest expanding Hispanic populations, Held said Burt Enterprises has made it a primary mission to discover ways to reach this market segment.

  "Almost one-fourth of the under-18 population is Hispanic in Denver," Held told workshop attendees.

  He said the Hispanic Consulate and Hispanic Chamber of Commerce approached Burt Enterprises, asking what the company could do to assist Latinos in purchasing vehicles.

  First order of business for Burt Enterprises was to learn to value the Hispanic culture.

  "We built bigger closing rooms because often a buyer will bring in a 15- or 16-year-old relative during negotiations who speaks English," he said.

  In a PowerPoint presentation to attendees, Held displayed a slide giving an example of the Hispanic customer profile, which included:

  -- Has cash

  -- Brand Conscious

  -- Brand loyal

  -- Places high value on quality products

  -- Transaction not solely defined by price

  -- Strong referral business

  -- Ongoing service and parts business

  -- Values building long-term relationship

  Looking at what Hispanics value over non-Hispanics in the transaction process, Held discovered that Latinos place dealer financing as the second to top reason for visiting a new auto dealership, while non-Hispanics rank dealer financing as fifth most important.

  Since Burt Enterprises' dealerships are mainly located in the more affluent part of town, a good distance from where the majority of Hispanics live, the organization created a broker company called Burt Automotor, designed to specifically cater to the Spanish-speaking population.

  All personnel at this broker company are bilingual Spanish-speaking. Sales consultants are all cross-licensed to sell in a Burt dealership.

  "The brokers work their own deals -- front-to-back -- in dealerships," Held explained. He said all company signage, documentation and RISCs are offered in Spanish and English.

  All marketing for the Hispanic aspect of Burt Enterprises features: "Burt -- The Largest Hispanic Dealer in the U.S." Additionally, the company features the tagline "Tu tienes un amigo de Burt," which translates to "You have a friend at Burt."

  His company is supported by a variety of Latino organizations such as Univision, the Hispanic Chamber of Commerce and the Mexican Embassy. While the panelist agreed that the usual advertising is not generally successful reaching this demographic, Held mentioned that Burt Automotor has found success by advertising in bilingual publications, in addition to purchasing a media package with Univision and radio.

  According to Held, another strong marketing technique Burt Automotor offers is a debit card featuring the company's logo. This card carries the Visa insignia and has phone card capability so Hispanic consumers can call home to Mexico at discounted rates. It also features the buyers photo, which comes in handy during the F&I process as another form of identification. Held pointed out that the card is a convenient way to make car payments, and a social security number isn't required to be approved for such a card.

  "It provides a second form of identification," Held said. "A lot of Hispanics don't have bank accounts, as they don't trust them, and are cash-based. This is a way for them to store money. It's also a way to get the Automotor name out into the Hispanic community."

  To prove its trustworthiness to consumers, Burt's enforces company standards through the development of its own software, which monitors transactions so the brokers cannot take advantage of the buyers.

  "You just need to be sincere in what you're doing," Held said. "Offer potential buyers letters from satisfied customers."

  He said his company also makes sure all brokers and salespeople are AFIP certified through a program started by GMAC. If for some reason there is a problem with a transaction and the company is taken to court, by certifying its personnel and sending them to class, the company shows it has standards in place. He said the new salesperson or broker pays for the certification and once successfully completed, Burt reimburses him. Held mentioned that Northwood University is currently working on an online version of the certification.

  To educate consumers on the financing process and make them feel more comfortable, he recommends that Hispanics visit www.yourpathwaytovehiclefinancing.com, which has a Spanish version. Another good way to reassure Latino consumers is by providing the National Automobile Dealers Association Code of Conduct in Spanish, along with providing letters from prior customers, Held said.

  The company even provides a Spanish-speaking insurance agency for consumers who prefer to speak solely in their native language.

  Creating an outreach program for the community, Burt's sends personnel into the local schools to teach Hispanics what is involved in purchasing a vehicle. Held commented that his children weren't even provided with such a program.

  "We take this program out to schools to show the youth what's involved," he said. "We've had really good receptivity on the part of high schools participating."

  It's also a good idea to make sure the dealership is very involved in the Hispanic community such as hosting or sponsoring culturally relevant events, creating a scholarship program, promoting the success of Hispanic sales associates and more, Held suggested.

  The biggest problem with tapping into this buying demographic is getting lender approval, both Perry and Held agreed. While Perry said he's found a few lenders willing to work with his business, Held said his company is still searching.

  Much of the Hispanic business, when it comes to illegal immigrants, is lost to buy-here, pay-here dealers because the consumers don't have social security numbers and thus getting financing approved can prove difficult. However, Perry said he's found a few lenders that accept tax IDs.

  "I've found two or three finance companies that will lend to people without social security numbers," Perry noted.

  As for the legalities involved with selling to Latino customers, Hudson said there is not a lot of law in that area. He noted that at least 10 states have foreign language requirements for RISCs; however, he said it's a good idea to provide the contracts in Spanish regardless of whether the state requires it or not. As a rule of thumb, if the transaction occurs in Spanish, the contract should be provided in that language. Additionally, he pointed out that the Buyer's Guide should also be provided in Spanish.

  No matter how prepared a dealer is for dealing with Hispanics, there are always a few surprises, just as with any buying demographic, according to panelists. At least one audience member of Latino heritage concurred, saying he steers clear of selling to Hispanics because they are "just too tricky."

  Email: ARToday@autoremarketing.com

Silver Rules, But Individuality Gains Ground

   TROY, Mich. (Nov. 30, 2005) -- Silver continues its reign at the top vehicle color choice; however, it's facing strong competition from a bolder blue, in addition to gray, which comes infused with an array of colors, according to DuPont Automotive's 2005 Color Popularity Report. The trend to personalize vehicles through colors is growing, noted DuPont executives.  Full Story Here

   Email: ARToday@autoremarketing.com

Dates Confirmed for World of Special Finance 2nd Annual Conference & Expo

   FENTON, MINovember 3, 2005World of Special Finance Magazine is excited to announce that the 2nd Annual Conference & Expo will take place March 28-30, 2006 at the Crowne Plaza Riverwalk in San Antonio, Texas.

   "The positive response to the format of our first conference has reinforced our dedication to provide dealers and the special finance industry a forum to address today's market," stated Rick Sly, founding editor of World of Special Finance Magazine. "Our goal is to present stimulating, educational, yet entertaining sessions that will give our attendees the tools necessary to increase their bottom line. If you are in special finance or even thinking about it then someone from your company should attend. The networking possibilities will be endless."

   Interactive sessions between dealers, lenders, and all other attendees will again take place. Industry professionals, many of the magazine's writers and dealers will take charge of these discussions. Attendees will have the chance to get answers to "their" questions over this 2 day event. Also returning will be "Legal Jeopardy" last year's crowd favorite.

   For registration and exhibit space information contact Stacey Amega at (810) 714-9513 or samega@wosfmagazine.com.

World of Special Finance Magazine, eNewsletter: News & Updates Vol 2 Iss 41

Chase Auto Finance Opens New Custom Finance Business Center Outside Kansas City

   OVERLAND PARK, KS, October 24, 2005 - Chase Auto Finance announced the opening of a new Custom Finance Business Center in Overland Park, a suburb of Kansas City, to serve the sub-prime indirect financing needs of automotive dealers in the Kansas and Missouri markets.

   The center at 6800 College Blvd. is Chase's 29th Custom Finance site and the third new location this year, including San Diego, CA and Baltimore, MD.  Center manager Kevin Harkins and the facility's credit team have more than 46 years combined experience in the auto industry.

   "We are excited to expand our presence in this market and provide sub-prime financing solutions to the greater Kansas/Missouri auto dealer community," said Bill Jensen, head of Chase's national sub-prime auto business.

   Source: Chase Auto Finance

World of Special Finance Magazine, eNewsletter: News & Updates Vol 2 Iss 40

10th Annual National Special Finance BHPH Conference

   Deal Pack's Leedom Report completion was well received by the Twenty Group members.

   Autoclick Integration with Deal Pack helps make processes flow easy for dealer.

   Evie, Marketing Executive of ABCoA presents their latest booth at the 10th Annual National Special Finance Buy Here Pay Here Conference held October 9-11 at the J.W. Marriott in Orlando.

   Sammy Rabiei, Account Specialist, Paul Guerber, Technical Manager, and Andrew Fallon, Account Specialist all are part of the Support Team with ABCoA attending the 10th Annual Special Finance Buy Here Pay Here Conference.  They were all available to demonstrate and answer any questions prospects and current customers may have asked.

Advanced Business Computers of America

NADC Celebrates First Anniversary

   Linthicum, MD (October 6, 2005) --- Previews of regulatory challenges to come, information exchange and advice are available to members of the National Association of Dealer Counsel (NADC). The NADC celebrated its first anniversary in September. In the first year, 330 attorneys who represent auto and other vehicle dealers as either inside or outside counsel have joined and have the invaluable opportunity to learn from each other. A lively email list serve, newsletters, a members only conference and online resources including a forum have armed attorneys to face the growing body of legislation and increasing threat of litigation. NADC resources help members offer the best possible counsel to their clients.

   A workshop, Anatomy of a Buy-Sell Agreement, will be held in San Diego November 3 - 4, 2005 and is open to NADC members. In evaluations of the successful member conference in April, members suggested that in addition to an annual conference, the NADC present single day workshops devoted to in depth coverage of a single topic. "Knowledge is power," says Jonathan Harvey, Harvey and Mumford LLP, and NADC president, "and the knowledge our members gain benefits our dealer clients."

   Members value the opportunities to learn how other attorneys handle similar problems and to gain several perspectives on meeting regulatory challenges. Through the question and answer exchanges of the e-mail list serve, the forum and at conferences, members learn from the experience of others and use the knowledge to build strategies to meet client needs. "Discussion of a regulatory issue in another state is of interest," says Gary Adams, Greater Cleveland Auto Dealers Association and a member of the NADC board of directors, "because it may be only a matter of time before our members are facing the exact same issue. The NADC helps prepare me for challenges we are already facing and those yet to come."

   The NADC is a professional organization of attorneys and executives of state dealer associations representing automobile and other vehicle dealers, such as truck, motorcycle, boat, motor home and ATV. Associate membership is open to companies and organizations interested in furthering NADC goals, and dealer membership is open to vehicle dealers interested in attending the Association's educational meetings.

   Visit www.dealercounsel.com for more information on the November workshop and on membership.

World of Special Finance Magazine, eNewsletter: News & Updates Vol 2 Iss 39

SAFCo Introduces Online Payment for Automotive Special Finance Customers

    First-of-its-kind Payment Option for Credit-Challenged Borrowers

   Fort Lauderdale, Fla. (September 13, 2005)  SAFCo, a leading provider of automotive financing to credit-challenged customers, has announced that their borrowers are now able to make payments online. While this is a common feature of traditional automotive loans, it marks the first time that such an option has been made available in the special finance industry.

   Those who finance with SAFCo  typically, individuals with poor credit, no credit, prior bankruptcies or repossessions  will be able to access the payment site through SAFCo's web presence at www.GoSAFCo.com. The site is protected with advanced encryption technology to ensure the security of either credit card or debit card payments. Information is entered as it would be for any standard online transaction, and once payment has been submitted, an email confirms receipt.

   "Online payments enable SAFCo to improve the customer experience by offering more flexible payment options," said Fussell. "The industry is changing  the world is changing  and sub-prime customers are often just as likely as more traditional customers to be comfortable doing business online. We're doing what all responsible companies everywhere should be doing, and that's responding to the expectations of their customers."

   Source: SAFCo

World of Special Finance Magazine, eNewsletter: News & Updates Vol 2 Iss 36

10th Annual National Special Finance And Buy Here - Pay Here Conference *** Location Has Changed ***

  ATTENTION: All Dealers and Exhibitors Don't miss the 10th Annual...

   National Special Finance and Buy Here - Pay Here Conference

   Where: JW Marriott Grande Lakes Hotel in Orlando, FL
   When: October 9th-11th, 2005
   Who Attends: Everyone in the industry

   A Message To All Dealers, Lenders and Exhibitors:

   Given the catastrophic effects of Hurricane Katrina on the city of New Orleans, Leedom and Associates LLC has relocated the 10th Annual National Special Finance and Buy Here  Pay Here Conference to Orlando, Fla.
   We in Florida are unfortunately familiar with the devastating effects a hurricane of this magnitude has on peoples lives and property. Our hearts go out to the people who have been affected. We are making arrangements to donate a portion of the conference proceeds to the appropriate agencies that can deliver aid and relief.

   I would like to personally invite you to attend this premier industry event. Over the past 10 years this event has attracted more than 7,500 attendees, and has been consistently recognized as the market bellwether when it comes to the special finance and buy here  pay here industries. If there was ever a time for dealers to come together to examine their business and the marketplace it is now during this period of dramatic and unprecedented change.

   We look forward to seeing you in Orlando for our milestone, 10th Annual Conference.

   - Over 40 workshops
   - EXPO hall with 100 booths
   - Best of the Best presenters and training leaders
   - Over 7,500 attendees since 1996

   For more information use the links below or call Lisa Favitta at 866-4-LEEDOM ( 866-453-3366 ).

   Register now online
   Get more conference information
   Get answers to frequently asked questions

   See you in Orlando in October!

E-Mail subscription, autodealerdaily.com, September 2005

Wachovia Corporation To Acquire Westcorp And WFS Financial Inc In $3.91 Billion Transaction

    Creates nation's ninth largest auto loan originator and provides small presence in California retail banking market

   CHARLOTTE, N.C. (September 12,2005) – Wachovia Corp. (NYSE: WB) agreed to purchase Irvine, California-based Westcorp (NYSE: WES) for $3.42 billion to expand its auto finance group into a national business with offices in 47 states. Westcorp owns 84 percent of WFS Financial Inc (NASDAQ: WFSI). Wachovia also will acquire for $490 million the 16 percent of WFS Financial held by the public.

    The transaction will more than double the size of Wachovia's dealer financial services business, making it the nation's ninth largest auto loan originator. As a result of this transaction, Wachovia will add about 8,500 automobile dealer clients, approximately 920,000 individual customers and 19 retail banking offices in Southern California.

   "This transaction moves our auto finance business to a new level and gives us access to a new set of customers who can benefit from Wachovia's broad offering of financial services," said Ben Jenkins, president of Wachovia's General Bank. "Westcorp and WFS Financial have demonstrated a strong track record of growing revenue and earnings through all economic cycles. Our companies share the same strong commitment to customer service and delivering superior products to auto finance customers."

   The combined auto finance business will be based in Irvine and run by WFS Financial's President and Chief Executive Officer, Thomas Wolfe, who will report to Carlos Evans, head of Wachovia's Wholesale Banking. Following completion of the merger, David Stevens, who runs Wachovia's Dealer Financial Services unit, will become head of East Coast operations, overseeing national wholesale lending, specialized lending and the Dealer Service Center in Greenville, N.C. Bill Katafias, National Production Manager of WFS Financial, will become head of West Coast operations and National Retail Sales Executive, overseeing retail production. Both Stevens and Katafias will report to Wolfe.

   "Joining forces with Wachovia will benefit both our customers and our shareholders," said Ernest S. Rady, chairman of Westcorp. Rady will serve as chairman of Wachovia's dealer financial services business and chairman of California banking operations, reporting to Jenkins. "Together we'll have more to offer clients and a broader financial base on which to grow. I am very pleased to be joining Westcorp with Wachovia and believe our combined growth prospects will outpace the industry."

   Wachovia expects the purchase to close in the first quarter of 2006. Under the terms of the merger agreement, Westcorp shareholders will receive 1.2749 shares of Wachovia common stock in exchange for each share of Westcorp common stock. Additionally, WFS Financial's public shareholders will receive 1.4661 shares of Wachovia common stock in exchange for each share of WFS Financial common stock. The transaction is expected to produce an internal rate of return in excess of 15 percent and to be accretive to GAAP earnings in the second year, exceeding Wachovia's stated acquisition criteria.

   In connection with the merger agreement, Rady agreed to vote Westcorp shares, representing approximately 40 percent ownership of Westcorp, in favor of the proposed transaction. Rady started Westcorp in 1972.

   In connection with the execution of the merger agreement with Wachovia, the agreement and plan of merger and reorganization entered into as of May 23, 2004, among Westcorp, WFS Financial and Western Financial Bank, which contemplated the merger of WFS Financial with and into Western Financial Bank, was terminated.

   Source: Wachovia.com

World of Special Finance Magazine, eNewsletter: News & Updates Vol 2 Iss 35

National Special Finance and Buy Here — Pay Here Conference Relocated to Orlando, Fla., Due to Hurricane Katrina

   SARASOTA, Fla. (September 6, 2005) — Given the catastrophic effects of Hurricane Katrina on the city of New Orleans, Leedom and Associates LLC has relocated the upcoming 10th Annual National Special Finance and Buy Here – Pay Here Conference to Orlando, Fla.

   The used-vehicle industry event, which focuses on the special finance and buy here – pay here marketplace, will occur on its scheduled dates of October 9-11, 2005, however, it will be hosted at the JW Marriott Grande Lakes Hotel in Orlando.

   "We in Florida are unfortunately familiar with the devastating effects a hurricane of this magnitude has on people's lives and property," said Chris Leedom, president of the consultancy. "Our hearts go out to the people who have been affected. We are making arrangements to donate a portion of the conference proceeds to the appropriate agencies that can deliver aid and relief."

   Leedom said the firm is contacting the Independent Automobile Dealers Associations of Louisiana, Mississippi, Alabama and Florida to help association members get through this difficult period.

   All scheduled events of the National Special Finance and Buy Here – Pay Here Conference will be hosted as planned. Leedom and Associates is contacting every attendee to facilitate the change in venue. Staff will assist with reservation changes and make recommendations, wherever possible, regarding travel.

   Over the past 10 years this industry event has attracted more than 7,500 attendees, and has been consistently recognized as the market bellwether when it comes to the special finance and buy here – pay here industries.

   The National Conference will showcase the best the industry has to offer. More than 40 workshops have been selected from an initial review pool of 100. These workshops will address everything from dealership performance to training for personnel to capitalization and much, much more.

   Early registration discounts have been extended through September 15, 2005.

   "If there was ever a time for dealers to come together to examine their business and the marketplace it is now during this period of dramatic and unprecedented change," Leedom said.

   For more details or to register for the conference in Orlando please contact Lisa Favitta at (800) 966-8733.

World of Special Finance Magazine, eNewsletter: News & Updates Vol 2 Iss 34

Jim Bass Joins Interactive Financial Acceptance

   Richmond, VA – August 18, 2005 -- InterActive Financial Acceptance, LLC (IFA) has named James W. (Jim) Bass to direct licensing, underwriting processes, marketing, and dealer relationships for IFA a non-prime/sub-prime sales finance company licensed in 42 states. IFA is an indirect lending subsidiary of InterActive Financial Marketing Group, LLC (IFMG), one of the industry's top rated special finance lead generation companies.

   "Jim Bass brings a wealth of experience in the finance and auto industry to the table for us. His prior experience and network of business relationships will be a great asset to IFA," said Travis B. Weisleder, president and CEO, InterActive Financial Marketing Group.

   Mr. Bass, a licensed CPA, had been with Drivers Select, a new concept used car operation in the Dallas area, as the Executive Vice President. He was the founder and CEO of Autoeloan.com, Inc., a pioneer online sub prime finance company. Prior to founding Autoeloan, he was founder, President and COO of Auto One Acceptance Corporation, a nationally licensed sub prime vehicle financing company.

   A frequent speaker at finance and asset backed securitization conferences, Mr. Bass has been an active member of the sub/nonprime auto finance industry for almost 20 years and is one of the principal founders, a current member of the Board of Directors, the past President and Chairman and currently the serving Treasurer of the National Automotive Finance Association.

World of Special Finance Magazine, eNewsletter: News & Updates Vol 2 Iss 32

Leedom & Associates, LLC form additional Twenty Group Program

   Sarasota, Florida -- Leedom and Associates, LLC, the leaders in automotive retail and finance training and consulting announce the formation of another Automotive Finance Company Twenty Group. Due to tremendous growth of the Twenty Group program and automotive finance, the need for a second Automotive Finance Company group has arisen. This group will consist of medium to large captive and third party auto finance companies primarily serving the "unbankable" customer market segment. The organizational meeting of this group is scheduled to be held at the Ritz-Carlton Hotel in Sarasota, Florida on October 24-26, 2005.

   The mission of this group is to seek solutions to common challenges of operating successful sub-prime automotive finance companies through the meeting and networking of similar organizations. Leedom and Associates' goal is to provide a forum where these companies can network and discuss any and all challenges facing the industry and individual organizations. Beyond the meetings, Leedom and Associates will provide a monthly composite of retail operating results, finance operating results and portfolio analysis including industry benchmarks to the members in an effort to improve member profitability.

   "This group will add more industry leading organizations to the Independent Dealer and Automotive Finance Twenty Group program. We know the market, we have the expertise and we have the technology to serve these companies better than any other Twenty Group provider and we are proud to play a role in the prosperity of our members." Said Chuck Bonanno, Senior Partner at Leedom and Associates, LLC.

   All inquiries should be sent to Chuck Bonanno at chuck@twentygroups.com. or by phone at 800-966-8733

World of Special Finance Magazine, eNewsletter: News & Updates Vol 2 Iss 31

Upcoming Buy Here, Pay Here Education: Questions & Answers For NABD

   Since the National Conference in May 2005 in Las Vegas, I have received numerous calls about the National Alliance of Buy Here, Pay Here Dealers (NABD) plans for future training. This article will address those questions:

Question:   What Training events are planned for the near future?

Answer:     On September 14 – 16, 2005, NABD will hold a dealer training academy in Atlanta, Georgia, at the fabulous Manheim DRIVE facility. On November 6 – 8, 2005, we will hold an Inventory Management Conference in Reno / Lake Tahoe, Nevada.

Question:   Why did NABD decide on these two training events?

Answer:     The industry has needed more in-depth training on how to be successful. Our Academy will provide a dealer’s perspective featuring “tricks of the trade” by three of the nation’s most profitable dealers. In addition, dealers can learn how to get a line of credit, advertise wisely, utilize the Internet successfully, and select the right computer system from industry experts. In three days, attendees can learn ways to make millions of dollars in the future! Acquiring the right inventory at a reasonable cost is a major challenge for the buy here, pay here industry today. Our Reno conference will focus exclusively on where to find the best vehicles, how to recondition and make them ready for sale, and ways to “keep them running” over the entire life of the notes.

Question:   When is your next National Conference in Las Vegas?

Answer:     We will hold our 2006 National Buy Here, Pay Here Conference at the Las Vegas Hilton on May 8 – 10, 2006.

Question:   What can attendees expect to learn at the Dealer Academy?

Answer:     Attendees will learn practical ways to do the common things, uncommonly well! Our focus will be on forecasting your capital needs and structuring your operations to minimize taxes. We will discuss all the primary legal pitfalls, the value of joining a 20 Group, and key considerations on selecting the best computer system. Our dealer instructors will discuss how to acquire and recondition the right vehicles, underwrite the best customers, and the best ways to maximize portfolio collections. In addition, we will outline the best advertising strategies and show attendees where to get capital. All of the sessions will be interactive and the three day program will conclude with a roundtable discussion which will enable attendees to formulate an action plan to implement everything they learn. Whether you are new to the industry, or if you just want to become more profitable, this training is for you!

Questions:   How many dealers can attend the academy?

Answer:     Our interactive training sessions will be limited to only 50 dealerships. Each dealership is encouraged to have two attendees. Registration is proceeding well and we expect it to be sold out shortly.

Question:   How can dealers register for the academy and / or the Reno Inventory Conference?

Answer:     Registrations can be made online at the NABD website www.bhphinfo.com, via fax at 713-680-2474, or by calling 713-290-8171.

Question:   Who should attend the Inventory Conference in Reno?

Answer:     It all starts with the right vehicles! Given the highly competitive nature of the used vehicle market today, all dealers could benefit from this training. Controlling re-conditioning costs and keeping the vehicles running after the sale is essential to maximizing profitability and cash flow!

Question:   Will the Reno Conference have an exhibit hall?

Answer:     Yes, and it is nearly sold-out. Anyone interested in exhibiting is encouraged to call Keith at 713-290-8171 as soon as possible because the exhibit hall will be limited to 50 exhibitors.

Question:   How many attendees do you expect at your Reno Conference?

Answer:     We had more than 1,500 attendees at our Las Vegas Conference in May and approximately 1,000 are expected in Reno.

Question:   Where can we obtain more information about both events?

Answer:     Information can be obtained online at www.bhphinfo.com or by calling 713-290-8171. If you would like us to email you the agendas and registration forms, contact our office by telephone or give your email address at our website.

   Kenneth Shilson, CPA is Managing Partner of Shilson, Goldberg, Cheung and Associates, LLP a Houston based CPA firm which serves the used car industry. He is President of Subprime Analytics which performs electronic portfolio analysis. Mr. Shilson is also the founder of the National Alliance of Buy Here, Pay Here Dealers (NABD) which will host a Dealer Training Academy in Atlanta, Georgia on September 14-16, 2005 and a National Inventory Management Conference in Reno, Nevada on November 6-8, 2005. For further information on this training, visit the NABD website at www.bhphinfo.com or call (713) 290-8171.

   Don't Underestimate the Value of Education!

Kenneth B. Shilson, CPA

Buy Here, Pay Here; Getting on Top of Your Game!

   As I work with buy here, pay here dealers throughout the nation, I often get questions on how they can improve their profits and cash flow. Surprisingly, the answers to these questions are often simple and are the subject of this article.

   Dealers must do the following to be successful in the buy here, pay here business today:

   1) Educate themselves on new developments and the fatal industry pitfalls which can cost millions of dollars.

   2) Network with other dealers to learn from their mistakes and about best operating practices.

   3) Control costs and expenses by implementing efficient systems and procedures.

   4) Train key personnel and "inspect what they expect" and;

   5) Learn to do the "common things, uncommonly well".

   Although many of the items above seem obvious; doing them is the challenge. The quickest way to become better at all of the above is through dealer education. Knowing what to do is the first step toward doing it!

   The dealers who tell me that they are too busy "selling cars" to attend dealer education are the same names I see in the business obituaries. Learning what not to do, is as important as learning what to do. There is considerable value in validating your existing policies and practices against those used by other successful operators.

   Although we always think that the problems we face each day are unique, dealer networking usually proves they are not. Through networking, dealers often find that others have already solved the problems they face each day. In addition, networking provides a great way to find solutions without utilizing the trial and error approach which can cost you millions of dollars!

   Another important way for dealers to keep current on industry events is to read industry trade publications. Awareness of the latest industry legal and regulatory developments is important but awareness of changes in economic and business trends is also needed to plan properly. Once dealers become aware of developments that affect them; they must obtain additional information and an understanding of how to utilize that information for their own benefit. Educational conferences, seminars, and training help dealers obtain important information quickly and efficiently.

   Technology is an important part of controlling operating costs and expenses. In the current inflationary economic environment it costs more to do the same things you did last year! Therefore, implementing technology in your operations is critical in minimizing costs and maximizing efficiency.

   Although not everyone in the buy here, pay here business follows the same business model, certain models are more profitable than others. Dealers should identify which practices work best for them and implement them prudently. Analysis of historical operating performance can provide valuable insights into making better decisions.

   In summary, the dealers who take time for education often prosper while their competitors are failing through trial and error. It has been my experience that, in buy here, pay here, what you know usually won't hurt you, but what you don't know can kill you!

   Kenneth Shilson, CPA is Managing Partner of Shilson, Goldberg, Cheung and Associates, LLP a Houston based CPA firm which serves the used car industry. He is President of Subprime Analytics which performs electronic portfolio analysis. Mr. Shilson is also the founder of the National Alliance of Buy Here, Pay Here Dealers (NABD) which will host a Dealer Training Academy in Atlanta, Georgia on September 14-16, 2005 and a National Inventory Management Conference in Reno, Nevada on November 6-8, 2005. For further information on this training, visit the NABD website at www.bhphinfo.com or call (713) 290-8171.

   Don't Underestimate the Value of Education!

Kenneth B. Shilson, CPA

Change Isn’t Always Good

   When Monte Johnston decided to get into the Buy-Here, Pay-Here business back in 1997, it wasn’t long before he felt he was flying in the blind.
   Without a very good accounting system, he had little real understanding of just how well his business was operating. And without any hard numbers to study, Johnston – who runs Automatic Auto Finance in Fayetteville, Ark. – felt like he had no clue on just what he was doing right, and what was going wrong.
   That all changed, though, after he brought in accountant Ken Shilson, of Shilson Goldberg & Associates to go over his books. Shilson helped him set up a related finance company (RFC), a crucial element in handling the tax liabilities involved in BHPH. He helped establish the discount on each of the notes Johnston’s sales side provided the RFC, another issue that has to be handled with particular care.
   And Johnston began to systematically account for all of his expenses and revenue – along with a myriad of other financial measuring sticks.
   Says Johnston: “If it can be tracked, I track it. No numbers mean no feedback. You have to have that right in order to make your next move. The numbers have to be accurate and have to have integrity. Some people think the numbers are just the way you keep score, but I don’t think so at all. Numbers help you call the next play. If you don’t understand your numbers, and they’re not consistent, you’ll just get lost.”
   Finance experts say that the dealership business is so complex that anyone who hasn’t come up with a standardized approach to accounting is likely to find himself operating in the dark. Getting a good accounting system in place and having the discipline to produce daily, weekly and monthly reports you need can make the difference between success and failure.
   Done properly and with strict discipline, your reporting procedures will indicate which cars are most likely to turn a profit and which bright ideas need to be retired – permanently. A standard accounting procedure will also earn high marks from lenders, giving you an edge where you need it most.
   And by sticking with the accounting game plan, you’ll be a better, more disciplined player in the car business.
   That goes double for anyone who’s toting the note, like the BHPH dealer.
   “This thing has so many moving parts,” Johnston adds. “You’re not in the car business, you’re in the note business – yet you still have to manage the process.”
   And to figure out what inventory to buy, how much he’s spending before he sells a car and exactly how much he’s taking from each financing deal, Johnston needs a steady stream of precise numbers.
   Having Shilson come in regularly to make sure that his operation is on track helps keep the reports coming in as scheduled.
   It all starts with a solid accounting system.
   “I can tell you that they do need to have a computer system that tracks dealers’ inventory costs and inventory reconditioning charges and produces a detailed accounting of what went on in each and every transaction,” says Jan Kelly, who runs Kelly Enterprises and routinely consults with dealerships and does profit analysis for dealerships.
   Kelly offers an everyday example: Say you bought a truck wholesale that needed a repair job on the air conditioning before you could roll it out onto the lot.
   “There is a specific item that the expense is connected to, so you have an audit trail of what happened on every vehicle sold,” she says. “And then depending on the finance office and sales department – maybe you have a service department – depending on their receipts, that’s how you allocate fixed expenses.”
   All of that has to be in place before a dealer can start to calculate commissions properly.
   “They have to verify commissions, and if they can’t verify gross profits you cannot verify commissions. A dealer needs to keep track of their expenses and their revenues,” she adds. “How are they going to know if they’re making enough margins on their inventory? Otherwise, they’re going to think they made X when really they’re in the hole. Not every business is as detail-oriented as a car dealer should be, and it’s the details that make the difference between winning and losing. Sometimes your margins are so thin you can’t afford to be wrong.”
   A good dealer management system is also a much better solution than bringing in an outside accountant with no inside knowledge of the car business.
   “I’m not convinced outside accountants are the solution – unless they understand the car business, understand car business accounting,” says Kelly. “It’s very specialized. Bookkeepers are kind of odd. I know bookkeepers who can go anywhere in the car business and do a good job, but you can’t just come in and do a good job.”
   To operate successfully, dealers need to get a daily dock sheet from their F&I department that gives them a quick snapshot of where they are financially, adds Kelly. “Waiting until month’s end is too long. It helps identify the type of inventory that is selling. You may have the right inventory.”
   Some of the start-up used dealers think they can just get QuickBooks or an off-the-shelf bookkeeping system,” she adds. “But this is not like running your personal checkbook. It requires tracking receivables, payables, having accounts through your vendors, so you can track and produce financials. It’s more involved than what QuickBooks produces. And not only that, QuickBooks does not interface with a computer program that produces sales documentation.”
   More and more, dealers with a professional approach to accounting are looking for dealer management systems that will integrate with other programs that are up and running.
   To find the right kind of system, she says, call up the vendors and pepper them with questions. And ask your colleagues in the industry what works for them. “Every system has pluses or minuses,” she says. And the cost of each system can vary dramatically.
   “What type of support do they have? Manuals? Training classes? Online support? Or do they just say, ‘Here, congratulations, fire it up.’ And obviously some systems cost more, but do you want to integrate or have a standalone system? Most are integrating to reduce overhead in the accounting office. You reduce overheard by eliminating multiple entries.
   “There are certain reports that a dealer needs to get; daily, weekly, bi-weekly and some are monthly, but the dealer who looks at the traffic logs, who looks at the daily dock sheet, they are the ones maximizing their opportunities, who know what they can cut and what expenses are critical.”
   Shilson says he has provided regular feedback to the American Institute of Certified Public Accountants as they have met to consider guidance on how to handle BHPH transactions. More, he says, are on the way.
   BHPH, says Shilson, is “the finance business. It’s not about buying and selling cars. It’s about providing financing for them. And dealers have to be very careful in how they recognize income assets in their sub-prime portfolio. It’s not just yield, but collectability and the carrying values of those accounts on the finance company’s books.
   “For accounting purposes, there is a whole set of rules and practices going to BHPH, which basically allow you to account for things on the accrual method of accounting – which means you take into income the full profit of the vehicle even before you collect it. For federal income purposes, most of the bigger dealers set up a related finance company. That is a concept I really pioneered.”
   And by carefully handling the notes on the books of an RFC, dealers can delay paying taxes on their income until they actually receive it – as opposed to paying the tax on the “phantom” income that is projected on the books but often never materializes.
   There’s another big plus, adds Shilson. Dealers with the discipline needed to maintain a clean set of accounts and can track their operations precisely can share the information with bankers and other lenders when needed. And that kind of professionalism will pay off big time in better professional relationships.
   A big art of a good accounting system is knowing what you need to track. CPAs with experience in the car business have been able to identify much of that, says Shilson. And dealers working together in groups, like the Dealer 20 groups, have also successfully identified the kinds of numbers that dealers need to stay on top of. Meeting regularly, Dealer 20 groups share the information, so dealers can get a better idea of how high they should set the mark for their financial performance.
   After that, says Johnston, it’s up to the individual dealer to make sure they stay on track.
   “You can say all you want, adds Johnston, “but you have to have the discipline to stick with the program."

John Carroll, Page 18, Used Car Dealer Magazine, June 2005

New Orleans - Sunday October 09, 2005

   10th Annual National Special Finance and Buy Here - Pay Here Conference

Leedom and Associates, Twenty Groups - Consulting - Training, http://www.twentygroups.com

NABD Announces Buy Here, Pay Here Dealer Training Academy and Fall Inventory Conference!

   Houston, Texas, June 15, 2005 – The National Alliance of Buy Here, Pay Here Dealers (NABD) announced that it will host a three-day dealer training academy in Atlanta, Georgia, on September 14 – 16, 2005, at the fabulous Manheim DRIVE training facility.

World of Special Finance Magazine, eNewsletter: News & Updates Vol 2 Iss 25

We're changing. Our name

   Arcadia, TranSouth and Auto One are now CitiFinancial Auto.
   Arcadia, TranSouth and Auto One have slipped into something more comfortable: CitiFinancial Auto.  After all, as a member of Citigroup, few names represent financial strength like CitiFinancial Auto.  Our flexible programs and easy applications on DealerTrace and RouteOne will help you close more deals in less time. The name is changing, but our commitment to your success never will.  For more information, call 1-888-760-2886.

A member of Citigroup
CitiFinancial Auto

Page 1, World of Special Finance Magazine, May 2005

On Second Thought...

Harris Interactive and Kelley Blue Book Marketing Research Group say that 41 percent of car buyers currently in the market for a car have either changed their minds or are thinking strongly about vehicles they wouldn't normally consider because of high gas prices.

A gallon of gas reached a national average of $2 per gallon in February.  During that month, Harris and Kelley's research found that car buyers would consider a more fuel efficient vehicle if prices rose another 25 cents.

Page 6, Used Car Dealer Magazine, May 2005

Why Bankruptcy Filers Are Great Prospects For Buy Here, Pay Here

   With buy here, pay here a growing and potentially lucrative niche within the used car industry, dealers are able to explore which types of customers represent the best prospects for this specialized type of purchase and financing.
   What is the one market segment often overlooked?  Answer: 1.4 million Americans who fil bankruptcy every year.  But before you write them off as deadbeats, you should know the facts about them.  Bankruptcy filers are not always dealing with a lack of funds; often times, they are merely experiencing cash flow problems.  According to research conducted at Harvard Law School, the typical profile of the American middle class bankruptcy filer is just that - typical.
   The filer's average age is 38; 44 percent of filers are couples.  Thirty percent are women filing alone; 26 percent are men filing alone.  Bankruptcy filers are slightly better educated than the general population, but two out of three have lost a job, and half have experienced a serious health problem.  Combine these factors with misuse of easily obtained credit or divorce, and it's easy to see why people with relatively high household incomes may fall behind in payments, resulting in bankruptcy.
   If you're promoting buy here, pay here programs, one of the best ways to reach bankruptcy filers is through direct mail.  Although broadcast (radio and televistion ads) can be effective, they may also generate negative media coverage.  Direct mail, by its very nature, is targeted.  And direct mail is a terrific way to communicate directly to your prospective buyer.
   There are companies that can help you reach these people.  For example, mailing lists and telemarketing list of recent bankruptcy filers in your area are available.  Whether you want to send a letter with a limited-time rate offer or simply announce a seasonal sales event, direct mail is an extremely cost-effective marketing channel.
   Regardless of which broker you choose to obtain your bankruptcy prospects, make sure of the quality of your list.  The two keys to measuring and ensuring list quality are accuracy and freshness.  Ask some basic questions before you buy: Is the list clean?  Are there duplicate names?  How current is the list?  When was it last updated or revised?
   Knowing the answers to these questions can help you make important purchase decisions, and help you evaluate whether the price you're paying is a fair one.
   To find out about AutoListsUSA's direct marketing information or database processing services, please visit www.AutoListsUSA.com.

Page 46, Dealer Marketing Magazine, May 2005