Thanks to more data and information from NCM Associates, the National Independent Automobile Dealers Association and Subprime Analytics, Ken Shilson has more evidence showing the performance of the lease-here, pay-here model that more operators are leveraging as a way to augment their traditional retail installment contract business.
Shilson plans to share a wide array of specific metrics and comparisons when the National Alliance of Buy-Here, Pay-Here Dealers hosts its 19th annual conference at Wynn/Encore in Las Vegas on May 23 to 25.
During a recent conversation with BHPH Report, Shilson, the NABD president, shared the data point that stands out most when comparing metrics for buy-here, pay-here versus lease-here, pay-here. Turns out there is a much higher recovery rate when leasing.
Shilson intends to share specifics during one of three conference sessions dedicated to the leasing model.
“What we’ve seen with buy-here, pay-here is as the industry has gotten more challenging with more competition, the buy-here, pay-here customer knows that regardless of what he does with the car he can go out and get another car. A lot of people have literally trashed the buy-here, pay-here vehicle they bought,” Shilson said.
“With leasing, one of the advantages has been is that they don’t seem to do that,” he continued. “It’s not that there is not defaults in leasing because not being able to make their lease payment is the same as not being able to make their car payment. But most of the time, they just voluntarily turn the car back in and you don’t have the chase them all over the country. That’s why we’re seeing a much higher recovery rate for the lease-here model.”
Shilson plans to offer side-by-side comparisons of BHPH and LHPH metrics so attendees can decide if getting into the leasing business is worthwhile if they’re not in it already. Shilson acknowledged the compliance involving the documentation of leasing contracts as well as capital providers willing to send funds to operators booking leases have been the two hurdles that have prevented leasing from gaining a larger foothold in the deep subprime space.
“Because the compliance documentation hasn’t always been right, the capital providers have been reluctant to loan against it because they want to make sure the paperwork is right and everything is going work properly from a compliance standpoint. That has slowed the ability for people to get into this and build it on a big scale, but that is definitely changing,” Shilson said.
“The documentation now is compliant. There are now capital providers who see the leasing model as a viable alternative because you don’t have to stretch the term out 60 or 70 months to get the payment right because you use the residual value to help get the payment correct,” he added.
The other two conference sessions focused on leasing are focused on those two segments Shilson just mentioned — leasing compliance and capital acquisition.
Many more topics are on the conference agenda, including:
1. Regulatory changes and updates
2. Sourcing and financing the vehicles customers want today
3. The critical decisions needed to succeed today
4. The newest technology to improve efficiency and reduce operating costs
5. Operating practices that work both now and in the future
The general education sessions will also include a keynote presentation by Richard Flint on “Embracing Change” preceded by a benchmark/trends update from Chuck Bonano, NIADA 20 Group Director, and I which will put things into a financial perspective.
Shilson went on to mention NABD 2017 also features what he called a “Solutions Hall” along with workshops to help attendees find:
—The capital needed to fund growth
—Ways to regain lost market share
—Technology that increases profits and cash flow
—Ways to reduce bad debts and keep customers paying
—Marketing strategies to compete more successfully
— Compliance to avoid fatal pitfalls
—Compliance with the new AICPA credit loss measurement standard
—Technology to manage and control reconditioning cost
To register or get more information, visit or call (832) 767-4759.