The Industry's Leading Source For F&I, Sales And Technology

Special Finance®

Hitting the Sweet Spot

NABD founder explains why many franchised dealers are finding BHPH to be the ‘sweet spot’ of the industry — and how much they have left to learn.

June 2010, F&I and Showroom - Feature

by Tariq Kamal

In May, the National Alliance of Buy Here, Pay Here Dealers (NABD) held its annual conference at Las Vegas’ Venetian Resort Hotel Casino. The association’s founder and show chair Kenneth Shilson announced an attendance of 1,650 dealers and exhibitors, a 15 percent increase from the prior year. Further growth could push attendance past 1,900, a mark set several years ago when dealers of all stripes were thriving in a more favorable economic climate.

Since then, thousands of independent dealers have shut their doors. But the NABD still counts nearly 10,000 members across the United States and beyond. The magazine caught up with Shilson to learn why BHPH continues to grow, and what the future may hold.

F&I: This year’s event attracted significantly more attendees than last year’s show. What is the source of the increased interest in BHPH?

Shilson: Well, it’s really interesting. One of our speakers asked how many dealers in the crowd were there for the first time, and half the room raised their hands. We saw a significant number of franchised dealers. Many of them were displaced GM or Chrysler dealers, as you might expect, but many others still have franchised operations.

F&I: What changes have you made to the conference to accommodate new-car dealers?

Shilson: First, we made the move to The Venetian, and we’ll be there for the next two years as well. Franchised dealers expect a high-level venue. They also like interactive sessions, so we added more panels and discussions. I had predicted that special finance would take a long time to come back and those lenders would not reenter the market anytime soon. Now it seems special finance actually is starting to recover.

F&I: If that’s the case, or demand for used vehicles declines, should franchised dealers still consider BHPH?

Shilson: Smart franchised dealers will always offer a broad range of inventory. Many of them are sitting on a [used-car] goldmine. Buy-here, pay-here is the sweet spot of auto retail — those sales are not controlled by their manufacturers, and they can see the profit potential. A franchised dealer friend of mine from Charleston, S.C., was there. He started a BHPH operation several years ago. I remember that he was reluctant at first, but now he says it’s the best move he ever made.

F&I: The past few months also have seen a gain in momentum for the Brownback Amendment, which would exempt dealers who secure third-party financing from financial reform legislation. Has there been any effort to exempt BHPH dealers as well?

Shilson: The BHPH business will not get a get-out-of-jail-free card. I wish it would. We have worked closely with the NADA and talked with their legislative people, but more effort on behalf of independent dealers is needed. One of the NADA’s board members, Dave Westcott, agreed with me on that point. But he also said I need to stop referring to BHPH as alternative financing, so I’ve gotten away from that. We may one day need to move away from the term “buy-here, pay-here.” It’s stained.

F&I: What would you say to legislators who group BHPH in with predatory lending practices such as payday and title loans?

Shilson: We definitely should not be in that same barrel. I would say that if they think the government can head off another financial crisis with more regulation, they’re wrong. What will really happen is people will find “alternative” financing on their own, and that will create a black market.

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email: