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Sub-prime
With the downturn in business these past 2 years our cash flow has been depleted. How does one get into this market with no money to sustain until contracts start maturing in a couple years? We are paying well over wholesale to get inventory. Reconditioning, marketing, commissions, and overhead cost are difficult to cover when we only receive 60% from most subprime finance sources.
Replies to This Discussion
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Permalink Reply by Harlene Doane on -
Gary, can you clarify your post? It sounds like you are already working in the subprime market (contracting customers with finance sources not related to you) and you would like to enter the BHPH (where the customer is borrowing from you). Is that they case?
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Permalink Reply by Gary R. Bergeron on -
No, we rely on subprime sources to finance these deals. Typically they front us about 60% of our cost on these deals, leaving us to wait a couple years until the customer pays out loan to forward us our profit.
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Permalink Reply by Harlene Doane on
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You are utilizing companies like Credit Acceptance?
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Permalink Reply by Gary R. Bergeron on
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Are you referring to CAC? If so, no. They operate like most subprime companies where the dealer takes all the risks and does not share in the profits until (or if) the loan has paid out.
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Permalink Reply by jerry weeden on -
Gary-My group may be able to help you.Are you a franchise dealer or an independent?Give me a call at 810-938-7740.
Thanks-Jerry Weeden
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Permalink Reply by Gary R. Bergeron on
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Jerry, I will contact you later today. We are an independent.
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Permalink Reply by Shawn Foster on -
Gary. There are lots of lenders out there that dont keep 40%. Who are you currently using in the Finance office?
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Permalink Reply by Gary R. Bergeron on
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Shawn, We are currently using brokers. Not able to do bhph because of the cash flow problem.
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Permalink Reply by William Bryant on -
wow, is this something that's specific to your business (non-auto) or have you experienced this elsewhere?
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Permalink Reply by Gary R. Bergeron on
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I also have a independent U/C dealership. Since the change in banking policies, we are not able to access "A" rated consumer financing sources and have to rely on brokers.
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Permalink Reply by Tom Herald on -
Gary, as you know CT can be a bit tricky, particularly when it comes to finance. I do a lot of work in New England and specialize in non-prime sales, finance and operations. My advice is for you to check into CUDL if you haven't already. Nevertheless, feel free to call me or email and I will let you know the best options for independents in CT.
Tom Herald
859-816-7990
tom@heraldassociates.com
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