Time for Buy Here Pay Here Transparency

You know better than anyone that credit-challenged consumers don’t shop for a car like traditional shoppers. Their needs are different; their focus is different. Consumers with poor credit are nevertheless important to the automotive industry, representing 10% of used car sales annually (about 4.1 million units).¹ Excluding new car purchasers, credit-challenged car buyers pay around $10,500 for a vehicle, and the median price for a vehicle at a Buy Here Pay Here dealer is $8,433.

The need for financing approval drives the process for credit-challenged and BHPH purchasers — either the specific terms of financing or determining a dealership who can offer financing in house. If they can’t get approved, they are no longer shopping for a car. The challenge for these consumers is finding a dealer who can meet their needs in a reliable, easy way.

Credit-Challenged, But Well-Informed
BHPH and credit-challenged consumers skew female, lower income, younger in age, with poor credit. They are much more likely to be single, divorced, or separated, which has an impact on their credit score.

Yet, 80% of BHPH shoppers do research as part of their car-shopping process before going to a dealership.² This is a clear signal that your customers are attempting to be reasonably well-informed when they come to your dealership. Today, there are so many digital tools and resources – websites, reviews, search, email, chat, texting, tablets, smartphones and so on – that the vast majority of shoppers, regardless of their age or income, use in their search process. Our studies indicate that there are few differences between traditional shoppers and BHPH shoppers in terms of computer and mobile device ownership.

So, instead of sticking to traditional advertising methods alone, BHPH dealers should turn their attention online, where there are unlimited opportunities to promote your dealership and target these shoppers, both on your own website and on third-party sites like the Autotrader Buy Here Pay Here Center.

5 Easy Ways to Drive BHPH Consumers to Your Dealership

Nearly two out of three BHPH customers enter the vehicle shopping process with securing financing and/or identifying a dealer as their first priority. So it’s important is to align your advertising messages with the shopping priorities of your customer base. Your key objectives should be to:

• Create an environment for consumers based on financing & dealership first
• Create an environment that conveys the unique value of your products, services & processes
• Differentiate your dealership by building trust, satisfaction and loyalty
• Educate consumers and set proper expectations for purchase

Here, some tips on how to get there.

1. Stop tip-toeing around transparency

Now that there is a new wave of third-party sites just for BHPH dealers, it’s gotten much easier to open the doors to transparency. Without belaboring the point, your whole business model is going to have to be more forthright and transparent. It’s the law, but it’s also a far more productive process for both you and your customers.

What exactly does transparency mean?

Transparency implies openness, communication and accountability. Transparency is operating in such a way that it is easy for your customers to see and understand how decisions are made. For example, required down payments and/or estimated monthly payments, length of the term, actual inventory, warranties and service factor (if applicable). It also means truth in advertising.

Also keep in mind that misleading pricing is the top complaint of online shoppers. If your site doesn’t provide adequate information, they’re a click away from going somewhere else. Many of them will also read consumer reviews, which will tell them whether you’re the type of dealer they want to risk doing business with.

Transparency, though, is a two-way concept that works for you, too. So while a BHPH shopper has more access and insight into your business, you have just as much when they submit an online credit app. As such, this is a huge opportunity to adjust your strategies and connect with more shoppers.

2. Focus on features for your website and any third-party site where your cars are listed

• Focus on approval – Since approval is BHPH shoppers’ top concern, messages about financing approval should take precedence in all advertising – both online and offline.
• Talk about speed of process – Many BHPH shoppers are interested finding a dealer who can handle the vehicle purchase process quickly. The good news is that 83% of BHPH dealers complete the car buying process in 2 hours or less. This is an important message to include in advertising. For example, “Get Your Car in Less Than 2 Hours!”
• Down payments and payments
• Access to credit apps
• Online payment capabilities
• Information about what’s needed for approval, including list of required documents for financing
• Consider reporting customer payments to credit bureaus – Only 37% of BHPH customers’ payments appear on their credit report; however, 63% of BHPH customers would like their payments reported. As a result, consider using messages like, “We Can Help You Rebuild Your Credit.” Just be sure that if you advertise this message follow through on it. Also, don’t forget to vet this message with your legal counsel.
• Inventory – Most BHPH consumers live within 40 miles of a dealership. Be sure they can view all of the inventory they’re qualified for and that you provide vehicle specs, too.
• Language options
• Contact information

3. Merchandise your dealership online

Align your messages with your customers’ priorities.

• Clear descriptions and comment plus photos and video
• Customer testimonials
• Tout your experience
• FAQ section
• Showcase special dealership features
• Link to map and driving directions
• Use signage on your lot to promote financing, quick approvals and vehicle availability. Include your web address on all signage and other forms of communication.

4. Get involved in social media

According to a Pew Internet study, two-thirds of adults who use the Internet use social networking sites. In fact, only email and search engines such as Google and Yahoo are used more frequently. And, guess who social networking sites are most popular with? Women. So, social media, especially sites like Facebook, offers huge opportunities for you to reach and connect with shoppers.

5. Manage your online reputation

Because content is consumer-generated, many of your customers are going to turn to these sites for opinions and reviews of other shoppers’ experiences with your dealership. Stay on top of Google Places, Dealer Rater, Yahoo, Yelp, Kudzu, CitySearch, YouTube and Facebook. Be sure to respond to all comments, attempt to resolve negative reviews and don’t write fake reviews.

Remember, transparency, loyalty and compliance are the key pain points for credit-challenged car buyers. Line up your business with your customers’ needs and you’ll improve sales and profits.