In my 16 years in Buy Here, Pay Here operations, we marketed the business as “in-house” or “bad credit” financing. We sold a few cars for cash, but we were predominantly a Dealer-Controller Financing business. Since the inception of the Consumer Financial Protection Bureau (CFPB) and its complaint website, consumerfinance.gov/complaint, the FTC is watching these dealers more closely than ever.
There are several resources available to assist automotive dealers avoid illegal and deceptive advertising and marketing practices. I’ve compiled a short list of links to what I consider the most pertinent, but there are other good resources available, as well:
- Guide Against Deceptive Pricing – Offers guidance on how to comply with laws regarding comparison and bargain pricing.
- Guide Against Bait Advertising – Explains how to avoid illegal bait and switch tactics when pricing products.
- Guide Concerning the Use of the Word “Free” and Similar Representations - Documents the proper ways to advertise “free” items, such as “buy one, get one free” promotions.
- Good Pricing Practices – Provides suggestions for pricing your products and services. It is against the law to charge more than the advertised shelf price for a product. Stores that do may be subject to civil and criminal fines.
As a dealer, you must be careful that your salespeople are not telling customers that due to their credit, they cannot purchase the car you advertised for the ad price. You know it happens when the customer is declined for “bank financing” but approved for special financing or second-chance financing. The special financing approval requires a large loan discount. Your salesperson goes out and tells the customer they can get the car they want, but the price will be “x” instead of the advertised price. The same happens if the only way to get a deal approved is through the store’s BHPH operation.
Some independent dealers are primarily “retail” where they offer prime and subprime indirect financing. Some of these dealers will offer a few in-house loans to the right customers. If these dealers offer low prices or payment specials in their advertising, they need to be sure how the above scenario is handled by the salesforce. Many BHPH/LHPH dealers do not advertise prices or payment deals in order to prevent false advertising issues or bait-and-switch pricing. BHPH dealers generally advertise what they do — help the consumer with bad credit. Our message is about services available, vehicle dependability and how we can help most everyone get a vehicle.
I always tell retail dealers that almost every process in their retail operation will be opposite in a BHPH operation. Your salespeople in retail generally up the customer, meet and greet, qualify, test drive, trial close if “we can get the figures right,” then go inside and negotiate. Then they try to get the deal approved. In BHPH or special financing, after a salesperson ups the customer and begins to qualify, the salesman brings the customer inside to find out if they have an approvable deal, which then determines what vehicles to show them.
If you are doing deals in secondary financing or BHPH, you might consider advertising that does not contain vehicle prices or payments. Those ads open the door for possible FTC violations. With commission salespeople and managers it is hard to resist “converting” customers from one to the other. You probably already know that if your customer has landed on a particular vehicle that is “value priced” online or in other ads, your people cannot legally add a discount fee back to the price and do the deal.
The CFPB’s hotline for consumer complaints is just beginning to be known. As dealers, there are enough headaches to go around without creating them yourself. Market into your primary business and attract the customers that fit your business model.
Gene Daughtry is a BHPH executive conference moderator, trainer and consultant for NCM Associates. He’ll be teaching “BHPH Service Management” June 5-6 in Kansas City and he’ll be a presenter at the National Alliance for Buy Here Pay Here Dealers Conference and Dealer Academy in Las Vegas next week.
If you’re a retail dealer thinking about Buy Here, Pay Here, you’ll want to read Gene’s “Straight Talk About Dealer-Controlled Financing” whitepaper. It will help you understand the differences and similarities between franchised and BHPH operations and explains the various types of BHPH business models you need to consider before getting started. Get your copy here or visit Gene at NABD in the NCM exhibit booth, or at our Open House on May 21 in room Alsace I from 2:30 to 3:30 p.m.!

Over the course of my 25+ year career as a dealership consultant and trainer, my clients have rarely asked, “Should I consider employing the team concept in my sales department, similar to what I have in my service department?” However, when asked, I was always ready with a quick response: “Absolutely! Would you like me to show you how?” It seems the question is being asked a lot more frequently these days, and even though team selling has never necessarily been regarded as a “best practice,” it appears that the continually-changing retail automotive industry may now be regarding the sales team concept as a “next practice.”
A quick look at the current state of auto retailing would suggest that things are good. Tough times (and a couple of notable bankruptcies) have thinned dealer ranks. Although pressures are mounting, the manufacturers are still demonstrating discipline around production volumes. Most importantly, customers are returning to showrooms.
Dealers know you must provide fast, convenient, and competitively-priced service in order to retain your customer base. They also know that oil changes and light maintenance are the most requested service items by customers. Knowing this, why do dealers continually fight express service?





NCM has just completed the spring cycle of 20 Group meetings, each focusing a large segment of meeting room time to the Parts Department. Truth be told, we had not focused on this discipline for a number of years, being more concerned about the variable sales and expense management areas of our auto retail business. Have you ever been broadsided, completely unaware the hit was coming?
Leo Hart is an executive conference moderator for a number of NCM Associates 20 Groups, including franchised and multi-store dealership operations. You can reach Leo at 913.649.7830 or email 

When we ask service managers how important technician efficiency is to profitability, they most often say that “it goes hand-in-hand” or “if they aren’t efficient, you won’t make money.” I agree with their comments, but am constantly amazed with how they quantify “efficient.”
