TORONTO -

For Canadian dealer Larry Wright, his buy-here, pay-here offering started, essentially, as a solution to a financing problem.

Wright — president of Wright Auto Sales, Inc., which has two dealerships in four locations — needed to get a group of customers from overseas financed, but he was running into complications.

“RIM was our biggest customer at the time,” he said, referring to Research In Motion. “And they were bringing in a lot of people from overseas.

“They’re coming over on a two-year contract. Because they have a ‘9’ in their social insurance number, none of the banks will lend them money,” Wright noted.

(According to the Government of Canada’s Service Canada website, temporary workers in Canada who are not residents of the country and are not living in Canada permanently are given a ‘9’ at the beginning of their SIN, which is an identification number required to work or utilize benefits/programs from the government).

“So, we had all these great customers that were coming over, and none of the banks would lend them money,” he continued. “They had anywhere between $3,000 and $5,000 down; they were professional people; they had a two-year contract, and most of them were staying anyway. And we couldn’t put them in a car.”

So the dealership started offering buy-here, pay-here financing and it simply grew from there. Into the BHPH segment of the business six-and-a-half to seven years, Wright Auto Sales now has 671 BHPH accounts, along with the rest of its customer base.

Granted, not all dealers in Canada have that same kind of BHPH business. But Mark Dubois — who is the director and moderator for Buy Here Pay Here Performance Groups at Performance Inc. — believes there’s potential for this business model in Canada.

As such, he has been educating Canadian dealers about the BHPH segment. Dubois conducted presentations in Ontario during April, including a workshop at the Auto Remarketing Canada conference presented by CarProof.

During this process, one particular response from a dealer surprised him.

“One dealer said that he didn’t want to consider buy-here, pay-here because he didn’t feel he was ‘mean enough’ to be in the buy-here, pay-here business,” said Dubois. So how did he respond to this dealer’s trepidation?

“You know, nothing could be further from the truth, because the best buy-here, pay-here operators develop relationships with their customers; they help them with their financing terms, work with them when they can’t make their payment in full and nowhere in there is that stigma of being mean or being confrontational with your customers,” Dubois said.

This was just part of the message Dubois has been spreading in his discussions. He has been sharing with dealers how operating BHPH is different than retailing cars, what kind of capital is needed for BHPH, the best way to structure such a business and more.

And the concern expressed by the aforementioned dealer wasn’t the only thing to surprise Dubois.

“I’m actually quite surprised with the response,” he shared, saying interest among dealers has been “tremendous.”

Dubois added: “I was surprised to learn that there are dealers in Ontario that have buy-here, pay-here financing and as many as 700 active accounts on the books. That’s huge.

“So, there are dealers who are already doing it,” he continued. “It’s just somewhat few and far between.”

That’s the crux of Dubois’ mission. He sees the potential for BHPH in Canada. It’s just a matter of educating dealers to help them determine if the segment is right for them.

Some dealers will find that BHPH makes sense for them. Others won’t. Dubois aims to give them the tools to help them make that decision on their own.

“My objective is not to talk anybody into the buy-here, pay-here business or tell them that this is the best thing that could they could ever consider, but quite the opposite,” he explained. “You need to consider what the business is; you need to do your capital projections and then decide whether you have an appetite for this and whether this is something you want to move forward with,” also noting that they need to understand there are resources out there for them to help.

When asked what challenges dealers have brought up, Dubois said: “I think that the biggest challenge is just the comprehension that buy-here, pay-here is the finance business, not the car business as we know it. Probably the most feedback I had was dealers coming up to me afterward and saying, ‘You know what? I get it now.’”

And with a firm understanding on the concept, dealers can move forward and craft a BHPH strategy, if they so choose, Dubois emphasized.

That’s where the next steps for Dubois and Performance Inc. come into play.

First, Dubois will work in a consultant’s role with some of the dealers who have asked for help in building their BHPH business. Then, he will look to do more workshops in western Canada.

“We’ve seen a lot of interest by email and by communication from dealers in western Canada, so we’ll probably migrate to the west once we understand if and what restrictions there are,” he continued.