Financing

Frazer now part of NIADA National Member Benefit Program

In an effort to boost its commitment to buy-here, pay-here operators, dealer management software provider Frazer Computing became the newest member of the National Independent Automobile Dealers Association's National Member Benefit Program this week.

While it is new to the NMB program, Frazer has a long affiliation with NIADA, having joined the association’s Georgia affiliate in 1992. Frazer is currently a member of more than 30 of NIADA’s state associations.

“NIADA and its state associations are an incredible resource for independent dealers,” Frazer president Michael Frazer said. “We love the state associations and are now proud to call ourselves partners with the national association.”

More than 16,000 customers use the Frazer DMS to help run their dealership. The system features hundreds of integrations with other vendors and thousands of features, including vehicle management, printing forms, vehicle marketing, processing sales, buy here-pay here and accounting.

“We heartily welcome Frazer Computing, a longtime leader in the independent auto dealer DMS marketplace, as our newest NIADA National Member Benefit partner,” NIADA senior vice president of member services Scott Lilja said.

“Thousands of Frazer dealers are also NIADA members, and now we're expecting even more to start joining their state associations and NIADA,” Lilja went on to say.

Frazer DMS now integrated with F&I Express

Independent dealers and buy-here, pay-here operators who use Frazer Software to handle their DMS needs now have more options to serve their customers thanks to a strategic partnership the company finalized with F&I Express.

Officials highlighted the integration of F&I Express with Frazer Software is designed to provide dealerships with the ability to digitally rate and construct eContracts. Dealers can capture electronic signatures and submit contracts for more than 130 F&I aftermarket product providers.

The incorporation of F&I Express eContracting within Frazer Software also can provide an even more streamlined process for dealers.

Independent dealers using Frazer Software are able to digitally send the customer’s deal information directly over to F&I Express to complete the contract. They are ensured of 100-percent accuracy and error-free contracts, sending the contract quickly and digitally to the customer for signatures.

Once signed, the digital contract can be easily tracked and submitted.   

“Our primary mission at F&I Express is to provide automotive dealerships with digital solutions to make the F&I process easier, faster and 100 percent error-free,” F&I Express president and chief executive officer Brian Reed said.

“The integration with Frazer allows us to serve a wider range of dealers and provides them with new functionality that streamlines the total process,” Reed continued. “Dealers who use eContracting with Frazer DMS integration will find the process to be error-free and even more efficient.”

By entering just the VIN and mileage, the F&I Express platform automatically displays the plans available and calculates the contract price.

Frazer Software president Michael Frazer explained the chance of human error is diminished, and the need for dealers to look through pricing information is removed. He added customer satisfaction increases with a faster, error-free process, which saves time at the dealership.

“We are very excited for our dealer customers,” Frazer said. “The Frazer DMS will now be instantly integrated with an additional 130 companies.”

Nominations needed to highlight BHPH Movers & Shakers

Buy-here, pay-here might be one of the most intimate parts of the automotive industry. Participants take some of the biggest risks and help to provide transportation to individuals who have little financial means but need a vehicle the most.

For the September/October issue of BHPH Report, we’re looking to highlight executives, operators and managers who flourish in this space, what we’ve dubbed “Movers & Shakers.” And we need your help to make sure we highlight some of the most talented BHPH professionals.

Through Tuesday, Sept. 13, we’re accepting nominations for our next print edition of BHPH Report dedicated to “Movers & Shakers.” You can send nominations to BHPH Report senior editor Nick Zulovich at nzulovich@cherokeemediagroup.com. All we ask is for the company’s logo, a high-resolution head shot of the BHPH professional and a few comments stemming from these three questions:

—Why does this individual have a passion for the BHPH industry?

—How has this individual adapted to the changing demands of BHPH?

—How does this individual make the company and fellow employees better?

“While the industry has been the subject of misconstrued and negative conclusions about what buy-here, pay-here might be, automotive experts know the true importance and value this slice of the industry possesses, and why BHPH participants are so talented and successful,” said Bill Zadeits, publisher of BHPH Report.

“We hope this issue captures why buy-here, pay-here is one of the most innovative and pioneering pieces of the entire industry,” Zadeits continued.

Along with highlighting “Movers & Shakers,” the September/October issue of BHPH Report also will share a preview of what’s coming during the 13th annual fall conference hosted by the National Alliance of Buy-Here, Pay-Here Dealers. The conference, whose theme is “Best Practices to Succeed Now,” is designed for both new and experienced operators and is set for the first days of November.

The issue will also have a collection of recommendations from BHPH experts to enhance compliance and other operational departments.

So if you know of an industry professional who should be included in our next issue putting the spotlight on “Movers & Shakers,” send your nominations and responses to the questions listed above to BHPH Report senior editor Nick Zulovich (nzulovich@cherokeemediagroup.com).

And if you don’t already have one, get your free subscription to BHPH Report by going to www.autoremarketing.com/bhph/subscribe.

HBO show lambastes BHPH, but thankful customers remain

If any buy-here, pay-here operators were fans of the HBO comedy program “Last Week Tonight with John Oliver,” they might not be any longer after the host’s unflattering portrayal of subprime auto financing, and in particular BHPH dealerships.

The nearly 18-minute segment recounted the story of a vehicle repossessed and resold multiple times, revisited the series published by The Los Angeles Times that triggered significant legislation in California, and included snippets of comments that Ken Shilson, the president and founder of the National Alliance of Buy-Here, Pay-Here Dealers, made during the annual conference hosted by DBA International earlier this summer.

Before operators get too discouraged about being negatively portrayed, BHPH Report found a consumer who has greatly benefitted from the “transportation solution,” as Shilson likes to put it, that dealerships with related finance companies can provide individuals with badly bruised credit histories.

And the anecdote came from a story posted earlier this year by sister publication SubPrime Auto Finance News.

The individual, who was listed as Joy in the comments section and verified by BHPH Report, indicated that delivery came through a DriveTime dealership. One of DriveTime’s former top executives, Mark Sauder, was recently inducted into the NABD Hall of Fame.

Joy recollected, “DriveTime is great if you are responsible. I went to DriveTime because my heart broke every time my son cried because it was too cold to sit at the bus stop.

“My credit was so bad, I was surprised they gave me a car. When I was young I maxed out a bunch on credit cards and was evicted twice. I wouldn't give that person a car. I only had a job for a couple of months, but my baby was crying. So I went to them, and they saved me,” Joy continued.

Joy did some due diligence when selecting a vehicle, too.

“I took my car to two mechanics to be on the safe side. My car was great. It only needed one fix and they paid for it,” Joy wrote in the comments section of this report.

Another portion of the HBO show segment explained how a vehicle with a wholesale value of about $3,500 would cost someone buying from a BHPH operator many times that figure because of interest and the length of the contract.

Joy said, “Having a car has allowed me to go to school, so now I can afford the payments a little better. But I'm not really angry because even though I will pay double for the car, without them I would not have a car at all.”

Joy also touched on one of the most difficult parts of the BHPH business that the HBO segment didn’t paint favorably, either.

When referencing collections, Joy added, “If anyone owed me money, I’d call them all day also. That’s just a given. I don’t understand why people complain so much.”

If you haven’t seen the HBO show material, it’s available here and in the window at the top of this page.

For BHPH dealers who need more encouragement from fellow operators and industry experts, NABD’s next event could be the remedy.

NABD recently released details of its upcoming BHPH Conference set for the first days of November.

The conference, whose theme is “Best Practices to Succeed Now,” is designed for both new and experienced operators. The event marks the 13th annual fall conference hosted by NABD, which is the largest used-vehicle special interest group for BHPH operators with more than 13,000 members.

The conference — to be held Nov. 1-3 at the Rosen Shingle Creek Resort in Orlando, Fla. — features dual-track workshop sessions that will focus on best operating practices, compliance, technology and new developments that operators must learn in order to succeed in today’s highly competitive subprime auto finance market.

Attendees are encouraged to bring their families and enjoy one of the nation’s most popular destinations. NABD has arranged discounted room rates with no resort fees in an effort to make it affordable for everyone. Early registration and member discounts are available, while supplies last, by calling NABD at (832) 767-4759 or going online to www.bhphinfo.com.

A conference agenda and speaker information have been posted and will be updated on the NABD website at www.bhphinfo.com. Attendees and exhibitors are encouraged to register soon while space is still available.

3 indicators for improved BHPH opportunities

Recent developments in the subprime auto finance market indicate that better days are ahead for the buy-here, pay-here industry. The last 24 months have seen fierce competition for deep subprime customers from credit unions, finance companies and franchised dealers. Much of this competition has been fueled by billions of dollars from auto bond securitizations packaged by Wall Street and sold to investors who were seeking high investment yields.

Some recent indicators suggest that better subprime market conditions are ahead for independent BHPH operators as follows:

1. Some of the deep subprime auto bond securitizations are not performing as projected and further deterioration is expected during the summer months.

2. Inventory availability continues to improve from auto bond repos, off-lease and rental vehicles, and from franchise trade-ins.

3. The deep subprime customers of today who are “car dependent” are finding new and certified pre-owned vehicles unaffordable for their limited financial capacity.

The aforementioned changes do not guarantee that every BHPH operator will automatically regain lost market share. Instead, they need to realize that the old ways of operating may not lead them to BHPH success in the subprime finance market of today.

We must learn from the deep subprime auto bond losses by recognizing the following:

1. Selling late model vehicles to weaker credit borrowers does not end well.

2. Lower down payments and repayments create longer terms, which increases default risk.

3. The higher-cost vehicles collateralizing auto bonds increases loss severity in early defaults.

A proper business model is needed to succeed in the competitive subprime auto finance market of today. Competition for the best customers will always exist so operators must adapt in order to compete successfully by:

1. Evaluating your business model from a cash return perspective. Does it generate a cash return commensurate with your investment in the portfolio?

2. Selling vehicles is important but “keeping them sold” is what generates long term success.

3. Relationships not transactions are needed to keep customers paying over the life of the contracts. These weaker credit customers need a transportation solution, which keeps the vehicle running throughout the contract term.

4. Collecting deep subprime installment contracts requires training, experience, and knowledge of the regulations in order to avoid significant operating and regulatory mistakes, which can cost millions of dollars.

5. There are three important elements in every BHPH deal: the customer, the vehicle and the deal structure. Good underwriting is needed at origination to properly match the customer with a vehicle they can afford.

In response to the changing market opportunities, I have surveyed and will discuss the business models that are working the best in the current environment and the operating practices that generate them at our next NABD conference in Orlando, Fla., on Nov. 1-3. Many of the nation’s best operators and experts will share their tips and techniques to help other operators succeed. The conference theme is “Best Practices to Succeed Now.”

Will your own operation capitalize on these new opportunities? Is your business model designed for future success? Are you making compliance mistakes that will cause failure? Now is the time to take a look “under your hood” to get these answers. Good Luck!

Ken Shilson is president and founder of the National Alliance of Buy-Here, Pay-Here Dealers (NABD), which is the nation’s largest special interest group for this industry. Information is available at www.bhphinfo.com. Ken is also president of Subprime Analytics, which provides portfolio performance improvement analysis for operators and capital providers. For more information on the analytical services visit www.subanalytics.com.  

Arkansas operator secures $3.5M from Westlake ALPS

An operator who tries to sell used vehicles to credit-challenged consumers throughout Arkansas received a financial shot in the arm on Tuesday from Westlake Advanced Lending & Portfolio Services (ALPS).

Westlake ALPS, a division of Westlake Financial Services, finalized the formation of a $3.5 million revolving credit line with Star Finance of Hot Springs, Ark., an affiliate of Lloyd’s Auto Sales.

Westlake ALPS replaced Capital One Auto Finance as Lloyd’s exclusive institutional finance company, providing the operation with a secured revolving credit line to facilitate receivables growth for the next two years. Lloyd’s is an independent dealership based out of Hot Springs and serves the entire state.

“I was pleasantly surprised when I initially contacted Westlake,” Star Finance owner Lloyd Robertson said. “Right away, they were eager to assist me in securing a new line of credit. The entire process was easier than I ever expected, and they went above and beyond to expedite my deal and meet all of my financial needs.

“I now have much-needed capital at an affordable rate to help my portfolio grow and expand my business. I look forward to a long and healthy relationship with Westlake,” Robertson continued.

Westlake Financial Services’ ALPS division specializes in providing revolving credit lines to independent dealers throughout the United States. The division also acquires performing and distressed subprime loan portfolios from buy-here, pay-here dealerships and finance companies.

Forging relationships with operations such as Star Finance is the objective.

“We are excited to establish a partnership with Lloyd’s as they have proven to be a strong counterparty for Westlake Financial,” said Todd Laruffa, assistant vice president and division head of ALPS.

“Their business philosophy and growth strategy over the past 26 years is in line with Westlake’s vision, so we believe this partnership will be advantageous for both parties,” Laruffa added.

Dealerships, brokers and finance companies interested in learning more about Westlake’s ALPS can contact ALPS directly at (888) 937-2577.

DealerSocket making rounds to 7 states for dealer shows

For dealers who couldn’t make it to Las Vegas for the national events orchestrated by the National Alliance of Buy-Here, Pay-Here Dealers or the National Independent Automobile Dealers Association earlier this year, DealerSocket is going on a road trip to seven states to participate in more dealer events to showcase its soon-to-be released solutions.

DealerSocket is making this journey because the company is in the midst of its largest technology investment ever in the independent market along with sponsorships of several major state dealer associations and a lengthy lineup of convention appearances.

“DealerSocket’s dedication to independent dealers is unprecedented among tech companies in this space,” said Marylou Hastert, director of product marketing at DealerSocket. “We continue to increase our investment in independent product lines, including the release of an advanced new platform, called BlackBird, which will include a dealer management system (named iDMS) built specifically for independent dealers and a game-changing CRM.”

The company’s July appearances include the Georgia and Texas state IADA conferences.

• Georgia IADA Convention & Expo today through Saturday — Todd White, sales director, independent, at DealerSocket will present “Evolve at the Speed of Millennials,” pulling back the curtain on this fast-growing customer base as well as sharing new strategies and technologies to appeal to millennial buyers. Learn more at https://giadaconvention.org/speakers/todd-white.

• Texas IADA Conference & Expo on Sunday through Tuesday — For the first time ever, TIADA will open up the exhibit hall during select, non-exhibit hours for pre-scheduled demos. DealerSocket, a TIADA Business Partner, is now filling time slots on Monday between 2:30 and 5 p.m. for demos of products within its integrated technology platform tailored to independent dealers. Register for a demo at http://info.dealersocket.com/TIADA2016.html.

In addition to Georgia and Texas, DealerSocket will appear at IADA conventions for the Carolinas, Florida, Pennsylvania, Maryland and Delaware, along with NABD’s East Coast conference. The company will conduct live demos throughout each show highlighting its new integrated technology platform tailored to independent dealers, including DMS, CRM, inventory management software, data-mining tools, website offerings and digital marketing services. 

Wayne Reaves Software finalizes integration with F&I Express

A little more than a month after Wayne Reaves Software rolled out an enhancement to its current platform that can provide the capability for buy-here, pay-here dealers to furnish credit data to Equifax, the DMS provider completed an integration with F&I Express, a digital solution that can allow operators to electronically secure customer signatures and transmit contracts and other required data directly to participating sources.

Officials explained the incorporation of F&I Express eContracting within the Wayne Reaves DMS is designed to generate a streamlined process for dealers. Within the DMS, dealers can digitally send the customer’s deal information directly over to F&I Express to complete the contract. F&I managers are ensured of 100 percent accuracy and error-free contracts with a few clicks, sending the contract digitally to the customer for signatures.

Once completed, the digital contract can be easily tracked and submitted.     

“This new integration with Wayne Reaves will now further simplify the electronic contracting process — eliminating the need for dealers to re-enter contract data into the DMS,” said Brian Reed, president and chief executive officer of F&I Express.

“The integration with Wayne Reaves allows us to serve a wider range of dealers and provides them with new functionality that streamlines the total process. Dealers who use eContracting with Wayne Reaves DMS integration will find the process to be error-free and even more efficient,” Reed continued.

Reed went on to mention that eContracting can allow operators to significantly modernize their processes. It can automate critical checkpoints by ensuring that required fields and signatures are entered and contract requirements are met during the review process.

In addition, dealers now have access to more than 120 providers through the connection with F&I Express.

The companies added that the integration between Wayne Reaves and F&I Express significantly improves the process for independent dealers and BHPH operators. All Web-based, customers can be met where they choose and the contracts can be completed instantly.

Wayne Reaves president Jason Reaves insisted independent dealers now have more options than ever to serve their customers.

“Wayne Reaves’ car dealer management software provides an easy way to manage every aspect of the business,” Reaves said. “Now with our integration with F&I Express, our customers are able to easily pull accurate rates for providers and submit contracts electronically, 100 percent error-free.”

NIADA survey: 34% to increase workforce as sales expectations dip

Of the more than 150 independent dealerships included in Equifax’s latest edition of the National Independent Automobile Dealers Association Business Confidence Survey, a total of 34 percent indicated an anticipation of adding personnel within the next year, even though the expectations for sales growth during the third quarter and beyond softened.

How independent and buy-here, pay-here dealerships might use additional human capital surprised John Giamalvo a bit when the vice president of dealer services at Equifax examined the survey data, which was released on Wednesday during the 2016 NIADA Convention and Expo in Las Vegas.

“What really struck me was the area on which they’re going to increase human resources assets really lacked in the area that they need the most — in the finance area,” Giamalvo told BHPH Report during a phone conversation. “That struck me because it’s completely contradictory to where the business has been going in that space where I would suggest that’s the area that needs to be bolstered the most.”

According to the survey polling dealers during the second quarter of this year, only 4 percent of participating operators who intend to increase their workforce plan to bolster the finance department. The majority (53 percent) expect to reinforce the sales team while another 39 percent plan to increase personnel in the service department.

BHPH Report asked Giamalvo to consider why independent dealers are not pushing more staff into the finance department.

“I think there’s a little bit of legacy here where I think the independent and buy-here, pay-here space looks at traditional finance outlets and having to staff up for those areas, they don’t really look there,” he said.

“When you consider the last 15 years or so, the used-car market has gone from maybe 10 percent or 15 percent using financing for the sale to now well over 50 percent,” Giamalvo continued. “When you consider that, there might be a little legacy there. Certainly you need to have a well-thought-out finance department in place when half of the cars you’re going to put over the curb require financing to do so.”

Beyond what Giamalvo mentioned, Equifax highlighted three other major findings from the latest survey, including:

• Outlook for retail sales growth for the third quarter (44 percent) was less optimistic when compared to the growth expectations for the second quarter (56 percent), while there was an increase in the number of respondents who thought sales would remain the same.

• 48 percent of respondents anticipate their customer traffic will remain consistent, and 51 percent believe overall economic conditions in the auto industry will stay the same.

• 95 percent of dealers plan to maintain or raise their investment in digital marketing, with 30 percent expecting to decrease their spending on traditional media.

“While there are some indicators that show slightly less growth, dealers still see the industry as stable and the fact that investment levels across different marketing channels has increased is a sign that shift to digital and its potential, is a reality,”  Giamalvo said.

While Equifax and NIADA have worked together on this survey for some time, it wasn’t until this week that the finding were distributed publicly. Giamalvo explained why independent and BHPH dealers should watch what these trends are doing.

“Independent and buy-here, pay-here dealers don’t have the benefits of the resources from the manufacturers and the benefits of the captive lenders, which tend to be massive and capable of moving the market,” he said. “The independent market and buy-here, pay-here dealers, they don’t have those resources and they don’t have those insights that can be provided by the manufacturers.

“The ability to move the needle that the manufacturers can provide with incentives and what the captives can do by buying deep,” he continued. The captives buying deep is what’s eating into the buy-here, pay-here market quite a bit. They’re buying deep to move new cars.

“I think the independents and the buy-here, pay-here dealers responding to these surveys and understanding what you’re feeling in one state is aligned with what your brethren is feeling in other states as it relates to the issues these fellas are facing whether it’s financing or compliance, inventory issues, NIADA does a great job of crowd sourcing this information so they can focus in on the pain points and provide the thought leadership and disseminate it,” Giamalvo went on to say.

Equifax and NIADA conducted a presentation on Wednesday where experts from both organizations drilled deeper into the survey results. A video recording of the session can be found soon at www.niadatv.com.

“Partnering with Equifax on this quarterly business confidence survey has allowed us to gauge the pulse of the industry and the needs of our 15,000-plus dealer members,” NIADA senior vice president of dealer services Scott Lilja said about the survey, which can be viewed online here.

J.D. Byrider welcomes new franchisee in Denver

J.D. Byrider recently expanded its buy-here, pay-here dealership footprint in Colorado by bringing a new franchisee in the process.

The newest J.D. Byrider dealership is in Denver. It's the second store in Colorado but the first one for franchisee Rick Steenbock.

“My team and I are very excited to expand the J.D. Byrider brand to Denver,” Steenbock said. “We’re dedicated to bringing quality cars with affordable financing and a high level of customer service to a great community.”

The showroom at 6401 N. Federal Blvd. consists of 7,500 square feet along with 10 service bays.

This location is the second J.D. Byrider dealership to open this year as the company rolled out a store in Fort Smith, Ark. The company now has 169 locations in 36 states.

“Rick is an exceptional operator and will serve our customers well with his expansion in Denver,” said Tom Welter, vice president of franchising for J.D. Byrider. “He understands the value of our business model and operational support, both of which are driving the unprecedented unit growth we are experiencing.”

For more details, go to www.jdbyrider.com.

X