As new-vehicle sales continue to be affected by the economy and the decreasing average credit scores of vehicle purchasing customers, many franchise dealers are considering adding a buy-here, pay-here operation as another profit center for their business. This addition of Buy Here, Pay Here is not as easy as opening another used car lot and can be expensive and cash flow negative for some time. The long term profit potential, however is more consistent and predictable than the new vehicle department.
For some time, buy-here, pay-here has had the image of an operation not particularly good for new car franchisees. To begin with, due to the difference in demographic of the customer, new car franchise staff and owners have been concerned that they would have too many BHPH customers tieing them up in their new car showrooms.In addition, there may have been a concern that once a new car store became known for selling buy here pay here, the average Fico score of its' customers may drop, and the retail banks approval rates may go down for their "good" credit customers. Some of these may be true, but the benefits are so strong and there are ways to do BHPH without having the negatives.