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Buy Here Pay Here (BHPH) Payment Evolution

By Deal Pack - July 3, 2012

Attention Buy Here Pay Here Dealers: The business model has changed! Yes, you can still extend financing to sub-prime borrowers, but the days of you waiting until Friday afternoon to cash their payroll check and deduct their payment is becoming more and more archaic. To stay current with your customer base, the ability for you to accept an ever expanding variety of payments is critical.


The genesis of the BHPH model relied on customers who lived or worked within a relatively close proximity to their lot, allowing them to stay on top of payments, collections, and repossessions. This worked well a few decades ago when paper payroll checks were the norm and online payments were unheard of. Now, most of your customers are either forced to take their payroll on a preloaded debit card or do have some sort of active bank account to receive their weekly earnings.


For a BHPH dealer, this is fantastic news! Think about it. Now, you can expand your market – drawing in customers from across town or even farther away. Johnny Sub-prime just saw your vehicle on bookitout.com and is driving 40 miles to come take it for a test drive. I mean, come on, it’s not every day a midnight black 1999 Honda Accord with 17 inch rims hits the market. Since you already have Johnny’s credit info from your online credit application, you know you can work the numbers to get him in this vehicle. You need to make sure you not only get this deal done, but you secure a payment stream that isn’t dependent on the “PH” part of your BHPH model. Johnny lives and works about an hour away, so do you really think he’s going to swing by every week to keep his account current? Well, maybe he’ll mail you a money order…


In addition to the traditional methods of payment, all BHPH dealers need what I like to call “the trifecta” of payment solutions: Online Payments, Recurring Credit Card, and ACH. Since your website already has your inventory and credit application, it should also have an online payment portal. For pennies per transaction you can be up and running with a merchant that will facilitate this. Not to mention you can increase your profitability by charging an additional “convenience” fee for this type of payment. The recurring credit card is another option. Set your customer up to automatically charge their CC on their payment date, guaranteeing the money (assuming the CC doesn’t get declined) when it’s due. Also, the same bonus applies to this payment in the form of the aforementioned convenience fee. Last but not least: ACH payments. If your customer has a checking account, you can grab the funds and have them dumped directly in your bank account on their payment date. Again, we are assuming your customer just got paid and has a sufficient balance to cover the payment. In addition, you can incentivize your customers to be on a recurring payment program by offering such things as better financing terms, a lower down payment, etc…


There you have it, a plethora of payment options to keep you current in today’s BHPH market. Now you just have to remember all of the companies, user names, passwords, and websites that you are working with to effectively manage these new payment options… Or, you could have a Dealer Management Solution (DMS) that does all if it for you with a couple mouse clicks. Deal Pack not only can manage all these payment options, but also has integrations and automations for you to never leave our application while doing so. No double entry of payment information, no going to websites to see who paid when and how much, no expensive merchant fees to process your CC payments outside of our DMS. My point: Just as important as the payment options for your customers is your ability to effectively manage them. Making the receipt of your daily payments quick and simple is vital to keeping your customers happy and maximizing employee efficiency.

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