Deal Pack Blog
BHPH Software: How High is Too High for an Online Payment Fee?
When creating your user fees for online payment portals, there are some things that you may want to think about beforehand:
Due to the nature of BHPH sub-prime auto financing, and LHPH sub-prime auto leasing, the profit margin on the unit pricing is already high; the interest rate on the financing is high; you can calculate the interest as High APR Simple Interest, Add-On, or Rule of 78’s. None of the above would be acceptable in the normal car financing world.
What am I getting at? With the issues stated above, you are already taking a large portion of the consumer’s income up every month. Would you really want to run the risk of the customer going not being able to pay their payment because of another user fee? I have heard of user fees in the range of $10.00 per transaction. At that amount, with a customer on a weekly payment schedule, there goes another $40.00 a month out of their paychecks. That $40.00 could be the difference between them defaulting on their loan, or lease.
Why should you want to offer the online payment? Less time your employees, or yourself have to spend taking payments from customers; Less cash on your premises, which means less chance of robbery, and embezzlement; It is more convenient for the customer to make their payment. More space for new customers to park to view your vehicles.