On the surface, there’s not much that separates Legacy Auto Sales from the rest of the used-car lots in Henderson, Nev. Situated on a half-acre lot on Boulder Highway, just a few miles southeast of Las Vegas, Legacy’s rows of used cars appear to contain the usual mix of makes and models. The tidy office and Roscoe, the German shepherd guard dog, wouldn’t seem out of place at any other store.

What separates the Legacy team from most other independent dealers is the way they finance cars. When owner/president Susan Semlak, sales manager Jerome Sparkman and finance director Laura Nidelkoff opened the lot in 2002, they were determined to take a different approach to buy-here, pay-here.

“We don’t fit the mold,” Nidelkoff says. “We had an idea for how to run the business, and we’re all on the same page. We have good relationships with our customers. They come in every month to make their payments, and 70 to 80 percent of all our sales are referrals or repeat business.”

High payment, low interest

“What’s made us successful is our interest rate,” Sparkman says. “You can’t beat it. That’s our closer. When you’ve got customers who are used to paying 30 percent, it’s hard to turn down.”

All of Legacy’s buy-here, pay-here deals carry an interest rate of 18 percent. Until recently, it was only 8 percent. When the lot first opened, it was zero.

“We make up for it with a high monthly payment,” Sparkman says. “We ask for $325 a month. If they can’t make it, we can go biweekly or sometimes weekly.”

While a payment as high as $325 may seem unrealistic for many special finance customers, it has worked out well for Legacy. Customers who may be used to seeing only incremental changes to their credit balances are able to pay off their vehicle purchase relatively quickly, and they almost always come back for more. Sparkman says he’s never surprised when a returning customer or one of their friends or family members walks onto the lot.

“You have to realize,” he says, “these people have bought from big dealers before, and they’ve found themselves upside-down from the jump. After a year, they’ve been sucked dry. We don’t do that.”

F&I strategy and lead generation

For outside financing, Legacy enlisted the services of Portland-based Oregon Auto Finance after a visit from their local representative. In many cases, however, they’ll recommend that the customer find his or her own financing.

“We’ll tell them, ‘See if you can get a better rate through your credit union,’” Sparkman says. “It’s true that we don’t throw the lenders as many deals as we should, but we trust our in-house financing. Right now, we’re focusing on building up our

receivables and cash sales.”

That strategy carries through to service contracts, for which Legacy’s primary provider is the Eagle Warranty Corp. in Eynon, Pa. “On 95 percent of those outside deals, we’ll sell the service contract,” Sparkman says. “BHPH, hardly anybody. But we’re at about 50 percent sell-through on our cash deals.”

When it comes to marketing, a brief flirtation with newspaper and circular ads was Legacy’s only venture into traditional media. As of last year, its marketing spend has all gone to one place.

“AutoTrader.com,” Nidelkoff says. “AutoTrader gives us all the leads we can use. They make it easy to do the postings and they gave us a great deal. Our rep, Celeste, is one of my favorite people. Just like on the lot, you want to do business with people you like.”

Making deals

When Semlak, a longtime friend, asked Nidelkoff to head up Legacy’s finance department, she was well aware that Nidelkoff’s previous experience had soured her on automotive retail.

“I had just been working for a much larger dealer at the time,” Nidelkoff recalls, “I was doing collections. I was pulling in a lot of money, but I didn’t feel good about it. The deals they were writing … We were setting people up to fail. Plus, we were selling substandard cars.”

Nidelkoff found the idea of helping to run a smaller lot with greater control of the inventory very appealing.

“We sell good cars here,” she says. “Honestly? I’m a car freak. I drive these cars myself. And if anything goes wrong, we’ve got a great mechanic.”

In an effort to improve their service department, Sparkman and Nidelkoff hired Tim Sharetts, an experienced mechanic with exceptional customer service skills and a knack for finding parts. Additionally, they moved the garage off the lot. Legacy Auto Repair now is located in a rented, two-bay facility down the street.

“With the great work Tim is doing, we’re looking to expand our service department,” Sparkman says. “Right now, we’re running about 50/50 — 50 percent reconditioning or service on our vehicles, 50 percent outside business or referrals. We want to grow the outside part, maybe start servicing some of the smaller, local fleets.”

Checks and balances

In six years, Legacy Auto Sales’ inventory has grown from a five-vehicle lot to an average of 40 or 50 today, 20 or more of which will be sold each month, with in-house financing representing the bulk of the deals. Each member of the Legacy team attributes his or her success to the friendship and support of the others.

“We’re a tripod,” Sparkman says. “Susan, Laura and I have totally different personalities. Laura’s the finance expert. Susan keeps her eye on the bottom line.”

“Jerome’s the natural salesperson,” Nidelkoff says. “He’s the patient guy who can talk to anyone, and not just here. He’ll pull over if he sees someone broken down by the side of the road. He created one customer from that, in fact.”

Because Nidelkoff and Sparkman don’t draw commissions, they aren’t in competition with each other. They share the same desk and computer, and either can take a customer all the way through the sales process. Even so, few of their customers fail to develop a meaningful relationship with both.

“It’s like a barbershop in here sometimes,” Nidelkoff says. “Customers, vendors, our parts people, repo guys, some of them we see every day. They want to hang out, shoot the breeze. It may not be the most productive environment, but it works for us.”