Successful BHPH dealers understand they are in the finance business not the car business. They finance loans to customers with impaired credit, using their own capital. They also understand they are in the collections business, not the sales business. In BHPH, approving loans just to hit aggressive sales targets could actually put you out of business.
I often get asked “what is the secret to improving delinquency and collections?” The truth is, there is no “silver bullet” solution to improving this important part of a
BHPH business. There is not just one step or one change that will result in better collection results. Instead, it’s a combination of several things. A large component of improving delinquency and collections is the quality, training and actions of your collections staff. To do an effective job in collections you need the right staff with the right skill sets, and BHPH specific training. An effective collection staff requires people with problem solving skills. Yes, problem solving skills. The reason is that BHPH customers are generally not good money managers, and are not good at finding solutions to their money problems. They need proactive solutions to get past delinquency issues with their car payments.
A high percentage of your BHPH customers will miss a payment or make just a partial payment many times during the term of their loan. When unforeseen expenses come up such as an unusually high electric bill, or being short on a pay check because of lost hours due to an illness, they are just not prepared for the problem. In many cases these customers have to make choices about what bills they can afford to pay each month. Helping these customers through a difficult time by accepting a partial payment and spreading the delinquent payment over the next two or three payments will not only create positive customer relationships but can also lead to repeat and referral business!
Effective Use of Payment Arrangements: When a customer can’t make a payment in full or on time they will likely create a story or an excuse for why they can’t make the payment. An untrained or ineffective collections person may simply