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SMYRNA, Ga. — Doug Pitcher cringed at the thought of
buy-here, pay-here dealership paper moving to another finance company and the
outcome going badly.

"It's everything," Pitcher — the director of sales at United
Acceptance — said of making a smooth change to customers paying a finance
company instead of the originating BHPH dealer.

"I talk to people all of over the place and there are
dealers today that won't sell, and their reason is they had a really bad
experience," he continued. "When companies fail to make that transition of the
customer from the customer's portfolio to the buyer's portfolio, you ruin more
than just that customer. You end future business with that customer. You ruin
all the future referrals, plus it's putting a bad taste in their mouth. They're
spreading your name out there."

Ken Terkel, director of business development at AC AUTOPAY,
elaborated on Pitcher's points, touching on what might be the root of the
problem.

"To hear from a stranger, ‘We bought your loan. You have to
pay us now,' it's very cold," Terkel said. They've already had a problem in
many cases with a lender, a bad experience, a good chance they've had a
repossession or other issues."

Terkel then proposed a solution: having the BHPH dealer
explain where the paper is going before a customer receives a cold call from a
finance company asking about their current residence or other information that
might create a negative experience.

"It's better for the dealer to help make the transition then
roll it to us," Terkel said. "They're the ones the people bought the car from.
They've taken the down payment, and the customer is making timely payments. It's
better for the dealer seller to be able explain the benefits of the
transition."

Chris Tiller, vice president of business development and
marketing at CAR Financial Services, described this point in the deep subprime
auto finance cycle not as "difficult," rather as operations needing to be
"diligent to the process."

Tiller said, "You can't fast-track that process. You have to
talk to those customers. You have to verify those deals. Over time as you
develop a deeper relationship with that dealer and you work together for a
period of time, what you'll find is you'll have to verify less of those
customers because the dealer is setting them up right when he's selling them.

"As you develop a longer-term relationship with the dealer,
the process becomes easier," he added. "But not because the process itself has
become easier, just because everyone knows what everyone is doing."

While United Acceptance, AC AUTOPAY and CAR Financial
Services have created protocol with BHPH dealers to make sure this transition
goes well, Pitcher cautioned all parties involved about upstart operations who
are entering the business because of the rise of subprime auto financing since
the recession hit.

"If someone is entering into this business and they don't
have a platform to service accounts after they buy them, of course they can
offer less but it's a disaster waiting to happen. It's really frustrating for
me," Pitcher said.

"I've been in this industry for 20 years. I know there are
good companies that have been in this industry. I'm not alone. They're all
frustrated about the same thing. When we see someone coming in and they don't
have the platform to create a good transition process, it makes us all look
bad. It makes selling your accounts look bad when in fact that doesn't have to
be the case. It can be a very positive experience," he went on to say.

Nick Zulovich can be reached at nzulovich@subprimenews.com. Continue the conversation with SubPrime Auto Finance News on LinkedIn and Twitter.