Wisdom from a BHPH Veteran: Manage growth, stay informed and up-to-date
Ingram Walters has become somewhat of a wise, older brother in the buy here, pay here industry. A North Carolina dealer for more than 25 years, Walters has seen good times and bad, both in business and in his personal life. If you’ve heard him speak, you’ve undoubtedly heard him talk about fighting through the lean years and finding success despite setbacks.
He also has a heart for other dealers in the industry, especially those who are just starting out or in the early years of their business development. And he would love for them to learn from dealers like him who have done a lot of things right, but who have also had their share of missteps. “I could teach them so many things and save them millions of dollars in mistakes I’ve made,” he says.
One thing that Walters cautions dealers about is being deliberate about their growth. “There’s a saying that there are old buy here, pay here dealers, and there are really bold buy here, pay here dealers,” he says. “But there aren’t any old, bold buy here, pay here dealers. You can’t be too bold for too long in this business. You can’t grow too fast. Naturally, you want to hit bigger numbers, but that’s not always good in buy here, pay here.”
One skill Walters says he’s had to develop is a gauge on the customers he works with. The three metrics he says he focuses on the most are stability, ability and willingness to pay in the past. “It’s hard to tell someone ‘No’ when they have a good down-payment but they’re only making $9 an hour and can’t afford a payment and the expenses they have,” Walters says.
He also cautions dealers to not simply look at sales like an underwriting department. “Look at it like you’re loaning $5,000 to this customer you just met,” Walters says. “Would you, in fact, loan this customer five thousand of your dollars? Do you think they’re going to pay you back? Don’t ever forget what a big deal that is.”
He also says he wishes he had taken more time talking to customers over the years. “If I had do-overs, I would have kept my finger more on the pulse of my own underwriting,” Walters says. “I’d probably sit with them personally and let them know how important it was that they pay me back on time.
“I think that a face-to-face interview sounds old-timey, but still goes a long way me.”
Walters also encourages dealers to be proactive about demonstrating progress in their compliance efforts. He says dealers who are concerned about compliance should attend the National Alliance of Buy Here, Pay Here Dealers annual conference and use the event’s compliance workshops not only as sources of information but also for documentation of the dealership’s steps toward its staff compliance with regulations.
Walters, a co-founder of the NABD, says one step dealers could going over all the compliance information from the conference sessions with the employees and having them sign off on it. He said dealers might assemble those sign-offs along with all the receipts and the conference agenda and place them in a compliance file.
“Then, if and when the regulators come and want to know what I’d done about compliance, I’d pull that file out and say, ‘I’m glad you asked,’ and show them that file,” Walters says. “‘Here’s what we did and what we learned. I’m trying. I’m on the road to compliance.’”
Buy here, pay here dealers face a host of challenges, Walters says, that can often be addressed simply by staying updated on the latest developments. For example, he says, the IRS recently issued a ruling on accounting reserves that could have a huge impact on the industry and its ability to borrow. There’s also the issue of pricing, which has come under scrutiny in recent years. Walters referred to an article by Thomas Hudson of the law firm of Hudson Cook called, “Car pricing under the legal microscope.”
“We have to be cognizant of how we’re pricing our vehicles,” Walters says.
He also says that there is a wealth of new technology that dealers should be taking advantage of such as the latest GPS devices. “When it first got started it was $600 per car,” Walters says. “Now it’s well under $100, and it makes your collection a lot more efficient and effective.”
He noted that there is an adage that says that one calendar year is worth up to seven years in technology. “So if you haven’t updated your GPS technology in three years, then that’s 21-year-old technology that you’re using,” Walters says. “If it’s five years since you upgraded your CRM, some could argue that that technology is more than 30 years old.”
As he looks to the future, Walters says he thinks that brighter days are ahead for the buy here, pay here industry. As big banks begin to pull back on subprime lending, Walters says that greater opportunities will undoubtedly open for BHPH dealers. “That’s music to the ears of the buy here, pay here dealers,” he says. “It means that better days are ahead. It means that we survived a very aggressive dip by the big lenders into our customer base. Kudos to the ones who made it because a lot of people didn’t.”
He noted that in the past, he used to be hesitant to engage in subprime lending. “I was 100 percent buy here, pay here,” Walters says. “I tried subprime and was not successful at it. I’m doing it more today than I ever have before. It sure helps with cash flow. I wouldn’t think of doing without it now.”
While he stands firmly behind all the advice that he has to share, Walters still acknowledges that he isn’t the ultimate authority on all things related to buy here, pay here. Ultimately, he said he hopes that dealers will seek out as much information as possible.
“What I say is a way, but not the way,” Walters says. “There are a lot of ways to skin a cat.”