The American Repossessor

I will most likely generate a slew of hate mail on this subject, but I see a tremendous value in working Buy Here-Pay Here (BHPH) accounts. Also known as Tote-A-Note or simply a used car lot, these self financed sellers are either taboo or great income. There has long been a stigma attached to these types of clients, one that I have never realized or acknowledged. I suppose that many of you who shun the lots feel that you are too good to work these accounts. Just remember that I, along with many, many others, started our careers in this industry working the BHPH crowd. Let me take a moment to share with you why I find a value in these clients and why I am not above working them.

The biggest complaint by far that I have heard is the amount paid per unit recovered. No, the fees may not be as high as some of the commercial lenders, but with the flood of forwarders coming into the industry, the fees are not that much lower. If you structure your fee schedule correctly at the beginning of your relationship with the dealer, you stand to make a better profit in the long run. I would set a standard fee for simple recovery. From there, everything else was an add on. Keys, mileage, skip-tracing, etc. All were charged for, if used, and more often than not, the final fee was well above the standard fee. It is much easier to negotiate your fee schedule when you are standing face to face with the decision maker. Start high. It is much easier to negotiate down and nearly impossible to negotiate up.

Now that you and your client have an agreed upon fee schedule, get to work. Self finance lots are much more apt to assign a unit out for repossession than a major lender because they do not face the severe loss that the bigger lenders do. In fact, many BHPH lots look forward to having a unit recovered as they can turn that vehicle over and get another large down payment for it. I have seen the same Honda Accord sold to 6 different debtors. I am sure the dealer was making a profit on just his second sale and down payment. So, you can see why volume is the norm and with volume comes increased recoveries.

Now that you have your fees set and are out pulling in the dealers units comes one of the best benefits of working BHPH accounts. You spend the night working and in the morning, pull all the recoveries onto their lot and get paid on the spot. No waiting 30, 60 or even 120 days out before getting paid. I have spoke to more agency owners who have folded saying that they just couldn’t make it waiting weeks and weeks for payment.

Years ago I was working an account for a major lender. The debtor was a Doctor who had purchased His & Hers Jeep Cherokees. In the end, I located the debtor in Spain, where he had shipped both units to. That never happens with BHPH debtors. They are corralled into a small area by financial constraints. While the BHPH debtor does tend to be somewhat more transient, when they do run, they don’t run far. And quite often, they will move within the same housing circle that other debtors run in and after years of working these areas, you make some good contacts (Read Snitches). I find the BHPH skip to be so much easier to locate.

Another aspect of these types of accounts is the repeat debtor. I have recovered the same Ford Ranger from the same debtor over 12 times. We were on a first name basis and had worked out a routine for picking up his truck until he finally paid off his note. This happens because self financers have a lenient redemption policy compared to commercial lenders. Knowing your debtor and them knowing you makes for an easy day of it.

One other point I might make out is that almost all BHPH accounts come with a spare key. Now, while I agree that a keyed recovery is inherently more dangerous that a towed recovery, doing so dramatically decreases your operating costs. For years, I ran around in 4 cylinder cars with a driver. If I needed a wrecker or a rollback, I had 5 or 6 local towing companies that would be there in a matter of minutes for me. During the same period I was picking up tractor trailers, dump trucks and other equipment that wouldn’t fit on a self loader so I didn’t see the need for a truck when I could sub one out when needed. My overhead was low and my profits were high. No, there isn’t much glamour in running BHPH accounts, but I never thought of myself as a glamorous recovery agent. No, I was a cash hungry agent and there is money in BHPH’s if you know how to work it.

Go make some!