ORLANDO, Fla. —  As an eroding economy impacts businesses and car shoppers across the board, many buy-here, pay-here dealers are often faced with the challenge of customers not being able to make their payments. But many times, there are alternatives to repossession that end up working better for all parties involved. 

And many BHPH stores throughout the nation are putting these techniques into practice to help them overcome these hurdles. 

These points were emphasized by CarBiz USA's Mark Dubois during his opening remarks of a workshop at the recently held National Independent Automobile Dealers Association Convention and Expo. 

Dubois moderated a panel of four BHPH dealers — representing different regions and store sizes — who shared their perspectives and best practices on a wide variety of issues within this segment of the used-car industry. 

"In this economy, more and more customers are finding it difficult to make car payments," Dubois shared. "Working with customers, making sure they stay in the car may be the best thing for your loan portfolio." 

So, to shed some light of these challenges, Dubois turned to the dealer panel, which consisted of Todd Smith, of Dothan Motors in Dothan, Ala.; Dino Mercurio, of Prime Autos in West Palm Beach, Fla.; Dennis Craig, of Northpointe Motors in Traverse City, Mich.; and Ace Christian, of Rock Solid Auto Center in Mesa, Ariz. 

First, theses panelists were asked what options they provide to customers who can't make a payment. 

"Typically, we will accept partial payment and we try to get (an idea of) when they can make it right," Mercurio shared. "We try to work out the terms at that point." 

Offering his perspective, Smith said he is willing to work with late payments, under the condition that it is "it's the right person, right car and the right situation." 

And when customers are struggling with making payment, Smith encourages his collectors to "coach" them and work face-to-face to understand why they are having trouble. 

"There's nothing better than sitting down and talking eye-to-eye," he said.

Meanwhile, Christian said that his store does not accept partial payment, but he's willing to work with clients and carry the delinquency. Typically, he moves the late payment to the end of the contract if a customer is in dire straits. 

However, they must provide proof of why they cannot make payments.

Next up, Craig said his store accepts payments with verification of hardship. And if a customer loses his or her job, for example, Craig will work with them to find another one.

Mercurio then pointed out that no matter the situation, "Communication is key. If they're not communicating, we will pick up the car or turn it off."

Continuing on, the panelists were asked about the use of GPS and starter-interrupt devices. 

Of the group, Craig was the only one who said he currently uses them and indicated that 25 percent of his portfolio is equipped with such devices.

While he explained that he doesn't have anything against GPS/starter-interrupt devices, Mercurio said he takes a different approach. 

"They key to this business is collections. If you put good people in the collections department, you don't need them," he suggested. "Nothing against starter-interrupt devices, I would just try to do a better job on the front-end and have our collectors follow up." 

"It really has more to do with their business model," Smith said, explaining the choice of whether to use these devices. "It's a tool. It's not the silver bullet."

Next, the panelists were asked whether they take care of their own repossessions or sublet to another company. 

Craig said his dealership does repossessions in-house, while Christian's store sublets "for legal reasons." 

Meanwhile, Smith said he sublets but has done in-house repossessions in the past. 

"It's one of those things that you need to an expert or get out of it," he commented.

Moving on, the dealers were also asked about their basic underwriting criteria. 

Beginning with Mercurio, he explained that, "Our one key word is 'findable.' Can you find the car and the customer? We want to verify addresses and employment." 

Smith and Christian said they both use the AutoZoom BHPH scoring tool, and Christian also requires customers to provide 12 references.

Craig requires buyers to fill out a five-page application, which includes a map. Specifically, he also examines net disposable income to get a better picture of the buyer's ability to make payments. 

"We're looking at how much money is being taken out of the family's disposable income and can they handle it," he shared."

Finally, each panelist went around and shared one piece of advice they would give to any dealers looking to start up a BHPH business.

Craig began, stating: "The biggest thing you really need to consider is that it's a huge commitment. Once you're in it, you have to be fully committed." 

Offering his point of view, Smith commented: "Understand and choose your business model and stick to it. Be careful plugging in new ideas. Make sure you understand the idea and how if fits into your market." 

For Christian, he suggested that dealers put strong policies and procedures in place. 

"It has to be written and in stone," he noted. 

Wrapping it up, Mercurio pointed out: "The biggest component is capital. Without capital, you just can't do it. 

"You can have the best of everything, but without capital you can't do anything," he continued. "Make sure you have enough capital behind you."