Avoiding Repossession

There is a misnomer that buy-here pay-here car dealers like to repo cars sell the same car several times.

Let me tell you, dealers do not like to repo cars. They would prefer that all their customers make all their payments and be able to hand them the title at the end of the term, at the end of the note, which is three years for us or shorter. It's better for the customer, better for their credit rating, and helps improve their credit if they make all their payments.

It's a hassle on the buy-here pay-here dealers to have to hire a repo company to go out and find the vehicle. And there's always the potential for bad feelings between the dealer and the customer.

And we have no interest. We prefer that every one of our customers pay for their vehicles, pay them off and are handed the titles. We have zero interest in repossessing cars as far as selling cars over and over again. That's a hard business model to work through.

The dealer has to get the car back, then they have to put it back through the reconditioning process. Sometimes they'll pass through that process. A lot of times they don't. If the car hasn't been taken care of, there's certain questions that they have to deal with about that. So we prefer all customers make their payments in a timely manner. We like all their payments for the term of their note, and then give them the title.

We don't make money on repossessing cars. Like some people, we lose money.

Another misnomer is that we try to get customers to buy the most expensive vehicle on the lot. Absolutely not. It doesn't serve the customer's purpose to have them buy a vehicle that they can't afford. It doesn’t serve our purposes and the customer's purpose.

We match up their income and their needs and their budget all at the same time, so that they get the car that they need and want for a price that they can afford.
And one last misnomer is that we make all of our profit as soon as we sell the car.

No, we make our profit one payment at a time. You know, if, if somebody comes in with a down payment, say they gave us $199, we immediately send a check to the state of Texas for $600, $700, $800. So we're, we're essentially starting off in the hole. We pay the cost of the vehicle. We have the tax title, license fees, plus the cost of the vehicle that we have to recruit in the form of payments.

Our profit is made one payment at a time, and it's quite a good way into the term of that note before we ever see a profitable situation for us. It behooves us to make sure that we take care of both the customer and the car for as long a period as we can, so that so that we can say that we've got a return on our investment toward the end of the note and the customer got their needs met by getting the right car at the right price.

So it's a process for us to be able to make money on the reconditioning, paying the state of Texas, and the selling. We provide the car for a certain amount of money. We spend a certain amount of money for reconditioning, spend a certain amount of money for a tax, title, license fees. And that's a significant amount of money that is put on the street by a buy-here pay-here dealer, including us.

We have to make sure that we work with our customers to be able to get the payment terms so that we can meet both their needs and ours.