Purchase - Buy Here Pay Here Bulk
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BHPH is a cash-intensive business. Once a dealer has loaned out all their capital to customers, they "run out of cash" but have a "portfolio of notes" (contracts). To get cash back to buy more cars, they sell these contracts in bulk to financial institutions. Key Terms in Bulk Portfolio Sales:
When an investor buys a portfolio, they buy it at a "discount" (e.g., buying $1M in total debt for $700k) to account for the high risk of default.
Dealers use their current loan contracts as collateral to borrow more money.
Bulk buyers must ensure all contracts comply with the federal Truth in Lending Act (TILA) and state Retail Installment Sales Acts (RISA) . The Art of Turning Cars into Cash | Auto Dealer Today
Roughly 25–40% of BHPH customers become delinquent within the first 60 days.
In BHPH, a "broken car = broken payment." If the car dies, the customer almost always stops paying.
BHPH is a cash-intensive business. Once a dealer has loaned out all their capital to customers, they "run out of cash" but have a "portfolio of notes" (contracts). To get cash back to buy more cars, they sell these contracts in bulk to financial institutions. Key Terms in Bulk Portfolio Sales:
When an investor buys a portfolio, they buy it at a "discount" (e.g., buying $1M in total debt for $700k) to account for the high risk of default.
Dealers use their current loan contracts as collateral to borrow more money.
Bulk buyers must ensure all contracts comply with the federal Truth in Lending Act (TILA) and state Retail Installment Sales Acts (RISA) . The Art of Turning Cars into Cash | Auto Dealer Today
Roughly 25–40% of BHPH customers become delinquent within the first 60 days.
In BHPH, a "broken car = broken payment." If the car dies, the customer almost always stops paying.
