Back in 2019, the auto dealership industry was the largest in the retail sector, representing 23.7% of all US retail sales. In 2021, along with motor vehicle and parts dealerships, this industry contributed 401 billion dollars to the USA's gross domestic product.
However, in 2021 and 2022, the automotive sector in the United States was forced to adapt to changes dictated by semiconductor shortages boiled by the COVID-19 pandemic and geopolitical tensions. Because of a limited supply and strong demand, the market saw a reduction in vehicle production by around 11.3 million in 2021. In 2022, another seven million are going to be removed from manufacturing.
Those changes had a direct impact on the market, causing limited vehicle selection and price inflation. As car prices are shooting higher and higher, the average car loan interest rate reached 5.7% in the third quarter of 2022. The industry has also recorded over 43 million used vehicle sales, growing by 6% compared to the previous year.
Because of the challenging automotive landscape for numerous car owners, buy here pay here auto dealer services are gaining recognition offering a smooth car shopping experience for buyers who may not be able to qualify for traditional auto financing.
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Trends Dictated by a New Car Dealership Paradigm
In a new automotive realm, we can clearly distinguish a few new trends that shape the market this year.
Digital Automobile Sales Are At Their Peak
Forward-looking and client-oriented auto brands start honing the online shopping experience for their customers. Automotive digital retailing software eliminates the need for visiting the car dealership and enables car shopping right from the comfort of their homes. Buyers can explore the selection of vehicle models, add features they want to see in the car and get the financing they require.
Increased Sales Of Used Cars
Higher demand for pre-owned cars occurs for a reason. Given the limited vehicle assortment due to the chip shortage and increased prices for new cars, vehicles four years old or newer see a boom in sales. These cars have most of the latest automotive technologies but come at a reduced price. Therefore, dealerships now have pre-owned auto inventories and offer attractive buy-here-pay-here auto financing for their buyers.
Focus On Improving Buyer Experience
The competition for the attention of the buyer among auto dealers is getting more fierce. This encourages companies to reconsider what level of service they deliver to their customers. Therefore, more and more dealers create e-commerce platforms for marketing their vehicles, schedule visits or book test drivers online, and offer an attractive auto dealer program for financial assistance such as a buy-here-pay-here car financing model.
What Is a Buy Here Pay Here Car Dealership?
When customers need a car but have scarce financial resources, you may offer them to consider BHPH car lots, which stand for buy here pay here lots. So, what is a buy here pay here dealership? In simple words, you, as a car dealer, offer in-house financial services without third parties like a bank or credit union. As we look closer at what's a buy here pay here dealership, it is worth noticing that it has two sources of profit. One - from selling cars, and second - from making car loans by skipping third-party financing from banks and other lenders. Thus, you may charge the maximum APR allowed by law. Some dealers require a relatively small down payment, making this loan model attractive to a wide number of buyers.
What is the buy here pay here cars' target audience? This dealership mainly specializes in helping buyers with poor or no credit reputations get a vehicle. For this reason, many future car owners consider it a last resort in their attempt to buy an auto. Usually, the BHPH lots include heavily used cars with low values.
How Does Buy Here Pay Here Car Sales Work?
When a buyer can't get a car with cash and lenders or banks do not give the credit for a loan, buy now pay here car dealership looks like a good option for people with no or poor credit history.
In the case of a traditional car dealership, a buyer signs a contract with a dealer who then passes it to the banks and other auto lenders. The latter decides whether to provide a loan to a particular customer. BHPH auto dealers do not have any middlemen and they give a car loans on their own.
Because one dealer handles the entire process - buying and financing, the purchasing process is much simpler and takes less time.
Software for Buy Here Pay Here Explained
While some BHPH car dealers manage financing operations manually using spreadsheets, other distributors leverage auto dealer financing software. So, let's dive into this type of software and see what features it can offer to companies dealing with BHPH.
What Does Buy Here Pay Here Software Stand For?
When you look for a way to automate the entire car financing lifecycle, you will benefit from buy here pay here auto software. This is a complex solution that contains all you need to streamline and effectively manage your financing operations. Most custom-made apps are developed on the cloud to give you the advantage of mobility and affordability. You will encounter desktop, web-based, and mobile applications letting you choose the option that best suits your business needs.
Benefits of BHPH Cars Software
Being a buy here pay here automotive business and using a corresponding software for managing the workflows has plenty of benefits. Once you start this business from scratch or add it to your existing operations, you will reveal that a BHPH dealership can be highly rewarding because of:
- Making higher profit margins compared to the traditional car dealership;
- Selling to prospects you previously couldn't because of lender's restrictions;
- Gaining profit both from selling and financing;
- Ensuring customers can avoid embarrassing credit turndowns.
But pay here buy here car dealership requires a sizeable amount of paperwork. For instance, you will have to hold data about every vehicle in your inventory, loan files, customers and their loan status, documentation, and more. With the use of auto dealer software, you will get a centralized hub for storing, managing and exchanging all sorts of files, documents, and data required for the proper operation of your business.
In addition, the team gets a significant boost. With automated instruments like notifications, payment processing, meeting scheduling, and more, there will be no need to manually do this sort of job. The great thing about this software is that it can be integrated with other applications. This way, you cut the time required for performing duplicated tasks and improve staff performance.
Another prominent perk of car dealership buy here pay here software is its ability to deliver complete visibility into every single financial process. You will see the general picture of the company's performance as well as track the status of loans for every individual customer. A centralized dashboard will provide you with powerful insights, while the capabilities of the application will enable you to manage every loan, estimate risks, digitalize the paperwork, and much more.
Buy Here Pay Here Dealer Software Features
The BHPH app functionality may differ depending on the app vendor or, in the case of custom software development, the modules you decide to add. However, in general terms, this application is useful for managing purchase-related processes regarding automobiles and loans. For example, with the use of this car dealer finance software, you will keep and maintain information about customers, guarantors, payment schedules, financial details, communication, and more. It will also allow you to set up automatic payments and send notifications to your customers.
So, BHPH software gives functionality to manage car lots and financing operations from a single dashboard with the features such as:
- A VIN decoder and vehicle notes;
- Custom buy here pay here payments schedules and terms;
- Automatic recurring payment processing;
- Detailed transaction, payment, and accounting history;
- Task generation and notes;
- Conversation logs and follow-ups;
- Automatic buyer notifications on all transactions;
- Automatic late fees management;
- Postponing payments, buyback, un-wind procedures processing;
- Risk analysis tools;
- Advanced analytics and reporting;
- Employee performance tracking.
However, off-the-rack buy here pay here software may offer limited capabilities by containing only some of these features. The same is true for legacy automotive buy here pay here applications that may have outdated or irrelevant functionality that is no longer capable of covering your needs.
Other Aspects to Consider in Car Dealerships Buy Here Pay Here Software
Even the most sophisticated, feature-rich application may turn out to be useless for the employees. The reasons are simple. Your dealer financing software may be hard to use and lack integrations with your tech system. So, how do you know that the digital product you choose will bring value to your business?
UI/UX Design Matters
Some businesses may not give much credit to the design of the application if it's meant for in-house use. That's a wrong approach as it doesn't allow extracting maximum value from the digital product. Your staff may reluctantly use it due to a clunky interface, poor app logic, and cumbersome navigation.
Therefore, BHPH auto software should have an appealing, intuitive interface that will facilitate the adoption of a new tool. This refers to graphics, layout, accessibility, navigation, and more.
Seamless Integration With Your Tech Stack
If you already use auto dealer accounting software or other systems like CRM, you will want your new platform to work seamlessly with the existing toolkit. This will help you eliminate duplicate work, ensure a smooth data exchange, track communication with customers, manage the sales funnel, streamline payments, and many more.
However, the trick is that off-the-rack BHPH auto sales software may be hard to fit into your existing tech ecosystem. The BHPH application may:
- Lack of APIs required for setting up the integration with a payment system or other apps;
- Be impossible to sync with a legacy system;
- Have no capabilities for integrating with custom-built digital products.
Luckily, there is a solution for businesses that heavily rely on their existing software system. Custom auto dealers buy here pay here software can be an effective remedy to integration issues.
What Is Custom BHPH Car Dealership Software?
Custom buy here pay here car dealerships software is built to cater to the needs of a specific BHPH dealerships organization. In contrast to mass market applications, custom digital products are oriented to accommodate your particular preferences and expectations. They will include the business-critical features which might not be available in an off-the-shelf solution and will provide greater efficiency or better customer service.
Usually, custom software development involves outsourcing services from vendors specializing in this niche. This is more cost-effective than hiring an in-house development team and gives access to a wide talent pool, ensuring only qualified people will be working on your project.
Ready-Made or Custom Dealer Finance Software
Both commercial and custom accounting software for used car dealer can be a game-changer for your business. The choice will rest on a few factors like:
| Mass market | Custom | |
| Cost | Either a subscription fee (charged monthly, quarterly, or yearly) or the upfront license payment.
Tend to be a more budget-friendly solution from a short-term perspective. |
The upfront payment for development services.
Tend to be a pricier option but may deliver great savings in the long run. |
| Value | Access to a specific set of features with limited customization.
May be too restrictive for a business. |
Access to the features implemented specifically for your organization.
A perfect combo of features that give max value. |
| Time | Can be used nearly instantly, though may require configuration.
The quickest to adopt. |
Require a solid time investment.
May need some time for development. |
| Maintenance | Maintaned and supported by a vendor.
No need for additional resources for app maintenance. |
Maintained and supported either by an in-house IT department or a third-party service provider.
Require resources for maintenance and support. |
| Updates | Totally on the vendor's wish.
No way to control what and when updates are released. |
You control when new updates are released.
Improve app functionality for better team performance at any time. |
| Integrations | May integrate with basic systems.
Syncing with non-integrated services can be hard or impossible. |
Will integrate with any system or application.
Syncing is easier, even with legacy or custom platforms. |
| Competitiveness | You have the same capabilities as your rivals.
Lower competitive edge. |
You get unique instruments to overshine your rivals.
Superior competitive edge. |
While the time and cost required for a custom buy here car dealerships application are higher compared to the mass market solutions, the business gets unique tools that none of the off-the-rack software can deliver.
Why Should You Consider BHPH Car Dealer Software Development?
Every pay-here-buy-here car dealerships business will benefit from using software that will enable managing loans and deals more efficiently. However, when ready-made solutions no longer meet the company's needs, a custom-built application comes to the rescue. It is undoubtedly the driver of business success, profitability, and performance.
Unique Solution
When you run a company dealing with buy here pay here vehicles, you may quickly figure out that mass market applications do not cover the full spectrum of your needs. The greatest value the custom solution brings is that it caters to the peculiar objectives of your business. It provides your staff with a unique toolset that allows handling day-to-day operations more efficiently. However, it is vital to find a reliable vendor that will build a robust solution that will meet your expectations. At Ergonized, we are ready to take on your project and provide you with a custom application according to your requirements.
Scales Easily
When you are just starting your buy here pay here used car business, an off-the-rack application may offer a sufficient amount of capabilities for your organization. But once your company grows, purchasing licenses or fees for a huge number of people may be irrelevant. On top of that, you may extend the list of your services, which will require a more sophisticated application for your growth. A custom buy here pay here car sales platform is a good choice for this case as it will eliminate the need for getting licenses for every new employee. Besides, when software is deployed in the cloud, it will easily scale when the need for resources increases.
Smooth Integrations
One of the reasons you will want to consider custom-tailored auto car dealership software buy here pay here is its ability to integrate with any existing software. Whether you leverage legacy or another custom digital product, experienced Ergonized developers will configure a flawless integration with any platform to let you refine business processes.
Custom Interface
Many software built for buy here pay here auto dealerships have clunky and outdated designs, making them unbearable to use. When you get a custom solution, you can request any interface you think is appropriate for your company. It refers to the design and user experience. Ergonized developers will add custom blocks and ensure simple navigation, while our designers will draw the app elements pleasant to the eyes.
Better Reliability
As you use off-the-shelf software, its performance totally relies on the vendor. When its servers fail, you can do nothing about that. When the app has bugs, you can do nothing about that. Custom software for BHPH car dealerships will give you total control over its maintenance and updates. When you see a critical bug that disrupts the performance of your employees, your technical partner will fix it without making you wait for ages.
Conclusion
When you have a business with buy here pay here for cars, you can improve its performance with the right software. While not all mass market applications cater to the needs of this business type, you can go with custom app development to get the functionality your staff requires for better performance and results.
Ergonized is a professional custom app development company with a solid track record in numerous domains, including automotive. We will build software that follows your requirements and meets your expectations. Our team is open to new projects, so contact us to learn what value we can bring to your business with a custom BHPH app.
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