Wake up, Buy Here, Pay Here people. It's a beautiful day. Go grab yourself another cup of joe and say hello to Jim and Michelle Rhodes on the Buy Here, Pay Here morning show. Take it away, you two. Hey everybody. Good morning. Happy Friday. Welcome to the studio in Ogden, Utah. I'm a little preoccupied. She's trying to figure out the whole new streaming thing. Facebook made some changes. Would you like me to explain it while you work on that? So Facebook made some changes and they're kind of changing the way that we're able to broadcast into Facebook groups. And of course, you know, a big part of our audience traditionally has been in the BHP success group. And so we're just trying to make sure we can get the stream made available to them. It just takes about seven more hoops we have to jump through in order to get there. And so Michelle's over there jumping through hoops. I'm trying, man. And I'm not exactly sure. Yeah, we'll see what happens. But it may take a couple more times. I'm done fussing. I am engaged. I'm present with the conversation now. So hi, everybody. It's Friday. Friday. Happy Friday. Yeah. I'm sorry. I was not listening. Obviously. Cause I'm, I, you know, they say that women can multitask. They do. They say, you know, and, and I can some of the time. I just wasn't right. The second to go. Um, so what do we have coming up? Well, we don't have our calendar for all the people that you've got scheduled. We've got a lot of people scheduled in the month of May. Yeah, yeah. Some NIEDA folks, obviously leading up to the NIEDA conference. Got some great, great topics. And, you know, we always stay a little bit fluid. So if there's something hot that comes up, it's like, oh, we should, can we move? Can we swish up around so that, you know, we're staying really relevant on the things that are mattering to people at the moment. Yeah. and I think one of the things I can tell people generally looking forward to upcoming white hat wednesday episodes um you can expect to see us continue to I'm calling it elevate the conversation and and what that what I mean by that is we got to spend a little more time in our industry and we're just going to start the conversations and provide a platform for those conversations where, you know, we got to spend a little less time talking about cost of cars and some of that stuff. And we got to talk about things like trust and what it means to earn trust to the consumers. And so, um, This is what I mean by elevating the conversation, how we work together to solve some of these problems. So this is part of what you can expect to see out of our White Hat Wednesdays. And we may occasionally stream off of a White Hat Wednesday morning just because this stuff is too important. We've got to bring the people to the conversations. And so just look for us to continue to talk about those things and start to figure out how do we begin to address some of this stuff. And today's conversation is going to be... Almost everything we do really can be tied back to some of this stuff, but it's like helping dealers understand this whole thing about selling paper in bulk. Why does it matter? If I never plan to sell paper, why should this stuff matter to me? This is all part of what we have to try to talk about and think about. We spend a lot of time with our dealers, helping them get a grasp on anticipated cash flows value of their business or their their portfolios as they sit and so on and so this is a this is a part of a continuing conversation but I'm just saying with our wednesdays in particular look for us look for white hat way to continue kind of elevate the conversation around some of the big stuff that doesn't get talked about enough right yeah or that we just need to try to change the tenor of the conversation yeah about the things the important stuff yep So, are you ready? Yeah, let's bring him in, shall we? Okay, excellent. All right. First, we're going to bring in Mr. Jimmy Rambo. Good morning. Good morning. Glad to have you here. You have been a guest on a handful of occasions. We're glad you're back with us. So willing. Thank you. Spartanburg. Looks like you're probably in offices in Spartanburg. I am. Nice. Glad to have you here. And then, Jimmy, we'll go ahead. I'm sorry. So Eric Batchelor from Alamo Financial is in the San Antonio area, Bernie, Texas, to be precise, right? Yes, sir. And so don't try to spell Bernie for us. We'll figure that out when we need it. this is the first time that Eric has joined us and we actually had the opportunity. I know Jim and Eric have known each other for a while. I had the opportunity when we were in Vegas to be able to have dinner with he and his lovely wife, Julie and and a few other dealers and things. And so it was just, you know, it's for me, it's a newer a newer connection. So I just, you know, thank you so much for, for that. Yeah, glad to have you here. So let me start with you, Jimmy. If you want to give folks your background, especially I'd love to hear about your own background prior to Spartan and the work that you've done. We haven't talked a lot about that, but take your time and tell folks kind of what you come from. Sure. I'm Jimmy Rambo with Spartan Financial. I've been with Spartan going on over seven years now. Spartan, of course, is the commercial division of American Credit Acceptance. American Credit Acceptance is a $4.8 billion indirect lender. At Spartan, we have really two lines of business. We do lines of credit and when we buy, bulk purchases. Previously at Spartan, I worked in community banking, commercial banking for 15 years. So half of that was a relationship manager. The other half was credit administration slash special assets, which is the workout side of the group of a bank. So it gave me a lot of time of like learning the relationship side, how to structure commercial credits. That's kind of my background with it. Sure. Very good. I can see how that serves you and the work you do now. So what about you, Eric? I know you've owned Alamo for many years. What about your work prior to that? Yeah. So I was with a large dealer group out of Dallas and that's where I, that was in the nineties. And that's when I learned kind of the nuts and bolts of a well-run buy here, pay here operation. And I had a friend that had a small used car lot. This was in 2000 and he was selling his paper off to a company and I had saved up a little bit of money and bought his, I said, why don't you let me buy it this time? So, So I bought a few and then that was in 2001. And that's all we've done since then. The same thing. So we have dealers, 37 states or so. And so, yeah, I really enjoy the business. I enjoy teaching dealers, giving any kind of information that's helpful for them. And this is a great topic you'll have today, I think. It's important. As you gentlemen know, we don't work with a lot of dealers who sell paper. We work with a lot of early stage dealers. And of course, part of what we do as coaches is try to help them manage and service and own their own paper. And so that's where we live mostly. But we certainly are familiar with the process. And we know that one of the things I said just this morning out there on a little short video was that It's important, I think, for dealers to be familiar with this process, even if they have no plans to sell paper. Part of what we ask our dealers to think about is if circumstances should change and you ever had to go someplace with that paper, it's just kind of important to understand that. What are the things that these bulk buyers would be looking for so that I can be sure that I've created some paper, which is my primary asset in my business, this portfolio of contracts, this paper, what's going to be its liquid value if something should change and I, for unforeseen reasons, need to go sell some or all of it. And that's actually a conversation we've had with other people that it's like, if you need to exit or if there's something that happens, a lot of dealers are faced with this question and a lot of them are saying, it comes up and they don't know the first thing about it. They don't understand. So for today, you don't, if you're in dealer in that situation, you don't have to think about those scenarios. You just have to think about what's my paper worth. So Jimmy, let me, let me start with you. Like what would be among the things? And as I said, we're not going to take in, there's a lot of proprietary stuff here that we're talking about key formulas and that sort of thing. But I just want to kind of help our listeners understand like what would be the things that you would be looking at? What would make the paper more valuable? For example, So it's kind of a function in a formula. I think everybody's got their own separate model, but you're looking at things like, it sounds simple, but days past due. I mean, how are the accounts you're looking at? Are they current or what's the delinquency of it? Loan to value, even seasoning, and then structure of the deal. And that can be Different buyers looking for different things, but sometimes you're looking at how much was down on it, how much down payment was, what's the APR on it, what's the monthly payment. All of that just kind of gets jumbled up together and different people put different weights on different parts of it. Those are kind of the big things you're kind of looking at when you first look at a portfolio. Did I understand you to say some dealers have customers that are past due? Yeah. Okay. Wow. Yeah. No, that's obviously part of our business. So Eric, your answer to the same? Pretty much. Yes. In general, we typically, you know, the shorter term, it seems like makes your portfolio a little more valuable if you keep terms as short as possible. Seasoning, like Jimmy said, not only down payment, But, you know, we don't put a lot of weight on the down payment, but how many payments have they made? That's always helpful. The LTV. And I think we'll maybe get into that later. Basically, make sure you're not way overpricing your vehicles using a GPS unit. We like to have those on there. So, yeah, that's good. OK, so, yeah, I do want to talk about LTV because Michelle and I need an education on that over here ourselves. So we so it's part it's obviously one of the big factors with with what you guys do. And yeah, I just think when I hear some of those factors, obviously the deal structure. Also, this is kind of and I'll stay with you for just a minute, like. you were buying paper through this weird spike that we experienced with COVID. So I'm wondering just in general, like how did that affect, if at all, did it affect your practices around buying and we'll get to LTV, which LTVs went to a weird place, right? For a time. And so, so how did that affect your strategy? I thought we were done. I thought customers aren't working. So I better start figuring out who I'm going to, what's my exit strategy. Right. Close the door and run. Yeah. Become a professional skier, right? So yeah, in general, that's what I was thinking. And then, so we buckled down and just got ready for some crazy stuff. And then most people know here come, stimulus and, and customers started getting current and some paying ahead and it was a whole different ball game. So, you know, thank goodness for that piece. And it was interesting the other day we were talking about over the 20 some years we've been in business. The things we've been through, it's weird. That's almost before internet really. And then we got, we went to Katrina. We had this long list of all these things, you know, we had a large number of accounts when Katrina hit all that, man alive. But anyway, so, uh, COVID ended up just kind of being blessing, helped customers out quite a bit. And. repos went way down or charge offs went way down so that's that's how it worked for us I assume it's like that was like that for jimmy as well it was I mean 2020 and 2021 were great collection years um It gave you the false hope that this was an easy business. And the reality is it's sunk in the last 18 months. And you know, I'll add for some newer dealers, I have seen recently some dealers that have been in business two to three years. Just what Jimmy stated, they're coming off. They're like, man, this is easy money over here. Look at our portfolio. i have to say well you need to start buckling down and getting ready for the realistic yeah they could pay a price for some bad habits probably in the coming months and years yeah it's obviously you know changing obviously now we're off of tax refund season so we're into a stretch now where you know it's going to be kind of telling and we're back to kind of uh you know practices from before we still have high car costs which means dealers are still having navigate that deal structure thing and that seems to be stabilizing there's some indications coming down a little bit uh you know that's not so much what we're here to talk about today and keep in mind though I think it's interesting let's go ahead and talk about the ltv uh piece jimmy because i I know ltv is loan to value and what we're really talking about is the the paper the balance on the paper relative to the value of the collateral like the book value of the car itself correct fair enough and so if that's the thing like I find it fascinating and it's really kind of telling and it's why this important this conversation can be really important We know almost nothing about LTV. Why? We never see book values on portfolios that we're working with with our dealers. Dealers don't think about LTV when they're not selling paper. When they start to think about LTV is when they're going to get a line of credit or when they're looking to sell some paper, right? That's when they start to really think about LTV. We know it's important. And it's certainly an indication, even if a dealer were never selling their paper, that it's an indication of where they own their paper, whatever that principal balance, you know, that top line value might be on their portfolio compared to the actual liquidation value in the market of that collateral. Is that a fair way to say it, Jimmy? that's correct so I think it's right for me it's like isn't that interesting that bulk buyers and lenders are are interested but dealers don't seem to be too wrapped up in the LTV now so but why is it a difference so let's try to break that down a little bit like for you Jimmy like what what's your feeling like why has that become uh such an important barometer for you guys when you're when you're looking to buy the paper Well, it's just that like, um, it's what that, that collateral, if we were to have to take it over and you have to actually, um, collect that vehicle, um, repossess it, what would we actually, um, get for it? Yeah. So we're wanting to minimize that. And sure. The loan, the loan of value, um, and plus the higher it is, that means just me that the more of the loss in there, particularly that gross loss you're going to have, and really the net loss too. But, um, So it's not just we tend to look at not just that origination, but what we kind of projected to be out over kind of the life of the vehicle, particularly if it's a higher mileage and making sure that that kind of mileage and kind of term match up with that value as well. Yeah, that makes sense. So it's so just kind of paraphrase a little bit of what I heard is that. you know even though you hope the account's going to be successful as as a bulk buyer who's assuming all the risk when you acquire the paper you have to be prepared for that eventuality what does it look like in a repo scenario right so that's kind of where you have to look at that as the backdrop anything to add to that eric um well really the the main thing to me when I hear ltv If I'm a dealer, really that's establishing a value of your, it touches a lot of pieces of your business. It tells you if maybe you're overpricing your vehicles a little bit, your lender, if you have a lender is gonna look at it, buyers are gonna look at it. And really it goes back to your point, Jim, it's very important in the value of your portfolio. So if you see your LTVs are way too high, then it may give you some false sense of Yeah. I have a question. Newbie here. Okay. So this is like an uneducated, slightly educated, whatever question. So LTV is based on book value, right? So that's whatever book that you're looking at. It's based on that. Of course, buy her, pay her dealers are going to place the price of the car above the book value, right? So is there like a percentage or a ratio that just works better? Because, I mean, obviously you guys both know this as well. And that's probably part of where you're doing all this weighing what's left on the loan, you know, all of this. And so is it is there like a secret sauce there? about where that value lies with, you know, where they're at with the loan. Because, you know, you mentioned seasoning as well. And seasoning means, you know, is this a new loan? Is this a loan that's been being collected for the last 12 months? Obviously a loan that's going to be collected for 12 months is going to have less owed on it. And so the loan to value will be different. So wait a minute, before you answer, I promised these gentlemen that we wouldn't take them into secret sauce. So just be sure. You don't have to give me exact, but it's just like, I want to understand it so that when dealers, you know, if they're not looking to sell right now, but they're looking, you know, I want to be able to cover all my bases. What is a good, you know, ratio for them to look at? Is there a target range? Yeah. I, I can just go ahead. Yeah. That's not a secret thing. That's something that any lender, any buyer, whatever should readily tell you that number. I think so. And, and going to your point, Michelle is so, so Aiden, a regular prime customer, if they walk into a bank and ask for an auto loan, let's just say that bank might say, we'll give you the LTV needs to be 110% of X. Okay. So they're already like putting an extra 10% in. Yeah. Whatever that is. And then, so going to a buy here, pay here dealer, the customer should know the dealer knows we know everybody knows that they're going to pay the customer because of risk is going to pay more for the vehicle. So in our case, and, Jimmy and any buyer, I think it's just a bigger percentage. And so what, instead of the 110, we look at a much higher percentage. So ours, you know, you can use different books. We use black book and that's just one of the tools that people have. And we use, uh, it's based on average black book and we like the LTV to be 185% or less. Uh, so that's loan to value. Okay. You know, that's kind of our general formula. So what I'm hearing from that, if I may, is, you know, I've heard the, and I hope I'm not squirreling off the subject, but, you know, I'm famous for that. If you've ever listened to the show, it's like, Michelle, you're just sort of as a curveball. So, crap, I should have stopped the commentary because my menopausal brain just kicked in. Let's come back to it. So, Jimmy, you were going to speak to the same thing about LTV ratio. Yeah, it tends to be. We use BlackBook as well for our values. And I will say, I mean, we'll go up a little bit. We'll go up higher than that, but that just impacts the price. I mean, there is a certain point we won't, we will not buy it. But I mean, it just, that's just kind of a function of the price, the higher the LTV, the lower someone's going to pay for it. I remember what I was going to say. So 185%, let's just say that this is kind of what we're looking at keeping. I've heard since I joined this journey in this industry, so many dealers say double and add 1,000. So that's going to be well over 185%. Depending on what kind of down payment you have. Depending on what kind of down payment you have. So this is something, it's like that model is not going to work. If you ever need to get into this kind of situation quickly, you're going to lose what you thought you were going to gain. You're going to lose a lot more of it. Yeah. And then that, when you guys look at that and it's above that LTV that is your threshold, that's where the percentage that you're going to advance starts. That's one of the places your percentage you're going to advance starts to drop, drop, drop, drop. But then the same with that. So you mark that vehicle up that much and plus that a thousand, you're not going to collect that really realistically anyway. So it's, there's so many different ways. What makes it so difficult? There's, there's no way to really standardize all this. Right. 500 different ways to do this business. And every dealer has got a slightly different way. And it's just kind of understanding how each piece kind of flows with each one. So you may have that double plus $1,000, but that means that a buyer may pay a little bit less, but that still could be more than, what if I only mark it up, say, $3,000, but then I'm only paying say 90% of this, but 70% versus that. So it could end up being kind of the same amount. Gotcha. Gotcha. So, yeah, I think, so what I'm hearing is, and maybe you can kind of tell me roughly about how many factors, but, you know, Jimmy, at your place, there's going to be some sort of scoring method and there's going to be a number of things that you sort of sweep the data through and to make a judgment. So, LTV would just be one of the factors that may affect pricing. It doesn't mean you wouldn't buy it. It just may affect pricing. So, I think the other thing that I would like to talk about around that is, and this is a question I didn't exactly prepare you for. She's doing it. He's sitting there saying, you're going to do it. I'm going to have to stay glassed. Yeah, well, this happens. It's kind of like if we just sat around a table at a conference. And if you don't have the answer readily available, it's fine. But one of the things that I had a conversation with somebody who was a former bulk buyer, and they talked about that they pretty much only bought paper at max APR. Is that true for both of you? Eric, we'll start with you. Do you pretty much, will you buy paper that's below max? Well, I have actually bought some 0% paper, so I'm kind of all over the place, but it affects pricing. That's dealers that comes up rarely not bid those portfolios. But if I bid one, say 0% and you're in, and I'm going to, my price would be in the 30% range that they don't understand really the interest. So that comes kind of challenging, but yes, we like the higher interest rates on there. So, you know, we don't require max and our, and our, our scoring model is, it's an average. So any of these things we're talking about is on a portfolio average. So there can be some deals in there with much higher LTVs, but you know, and then we have a max that we kick out, but you know, so I was going to kind of add that piece as well. So do you, Jimmy, you, you buy paper below max, but it also affects the pricing. It does. I mean, the APR definitely is one factor that any buyer is going to look at. But I mean, you're looking to see what your return is going to be. You can generate revenue off two things, either from the APR or the discount you're buying it at. Right. Did everyone hear that? Yeah. That there's two things that, you know, it's like the APR and the discount. It's like what will our... Because, you know, people that buy loans or people that buy the paper... They're, they're intending to make some money. Yeah. So they're not going to give you a hundred percent of something that are, you know, what, wherever it is that your, your repo rate is at 30% or whatever, just, you know, I, yeah. Well, and we can, we'll get to recourse, but I think, you know, the other thing that's happening here is these, these gentlemen, as they buy that paper, their companies are now owning the risk. Yeah. So that discount, that's what that discount is about. They have to have some allowance for the risk that they're now taking. So that's part of what the formula is built to do. But I think going back to LTV quickly, why would you max your LTV, Eric, at 185% or what? It's because history says that it doesn't perform well past that, right? It's like it doesn't perform as well. And so that's why the kind of the ceiling on some of that stuff for you. yes and we we uh do like to purchase paper that we feel like the customer has a chance to pay out so we don't buy a lot of huge you know long-term big balances that kind of stuff yeah go ahead sorry I was going to say one thing I was going to add about the apr is one thing that might be good for your dealers to know is using the same APR. So we do, you know, across all of your contracts. So we do see a lot of dealers that will send us a portfolio and the APRs are kind of all over the place. And that's, that's kind of a big no-no. So. Why is that a big no-no? Is that a big no-no for you or is that a big no-no for compliance? Compliance. And so, yes. And the reason for that is, and you, Correct me if I'm wrong, Jay, but you're supposed to charge the same rate because if somebody came in and examined your portfolio, why did you charge this person that, this person that, this person that? If you are going to do that, you need to have very clear written policies and stick to it and have like two programs or three programs. So we see dealers, I don't know why they... uh vary the aprs but I mean that makes it just unpurchasable basically that's the piece that's the piece we tend not to talk about in bulk buying is the compliance piece because nobody likes nobody likes to talk about compliance but then even like um you know you're that the apr piece but then are they even using compliant contracts you'd be surprised where they'd use an outdated form They've handwritten it. They've modified it. And so you're doing or maybe they didn't have the right disclosures or they've added something. So you're going to review contracts and deal jackets as part of the process. Yes. By the way, 75% of our audience just turned off their contract. I know, right? I'm trying. Yeah. It's true. It's something we have to recognize is that it affects value. You heard Eric say it. It's not viable. I'm not going to buy paper that's all over the place from a compliance standpoint. Squirrel a little bit is that, you know, compliance is not sexy. It is not fun. It is not something people want to talk about. And so to all of those out there in the world of compliance, like our friend Steve Levine and all those, you know, it's like they're doing their darndest to make it more fun. and easily, you know, consumable. And so it's like, it's, that is an uphill climb to, to get, get dealers to pay attention and to, you know, have an interest in these folks. You know, none of this stuff would translate if you, if I were Jim, just let me be the dealer for a minute. If I'm the dealer, Eric, and I have some paper and I'm charging max APR, What we recommend to dealers, because of the valuation element, we'll tell dealers in the early stages when we're doing a lot of their pro formas and cash flow modeling, I'll say, I'm going to make a suggestion that we set the APR on the higher side. We don't have to go to max. And the reason I'm advocating for that is because... We know it's going to affect paper value, even though you don't intend to liquidate this paper. It's going to affect value. You never know income. And you can always with those dealers, we say we can always create programs to give back to the consumers. Right. So we can always, you know, use that as ways which doesn't exactly translate to you if you buy the paper from me. But I'm simply saying that's part of the strategy that we have. urge dealers to take. And I just want to have a chance to explain why and have you guys kind of speak to that. It's like that. You just basically said that the APR having the APR is one of your sources of income. So it just, it's going to affect the value of the paper. Right? So let's see. I had something else I wanted to ask about. Oh, GPS. You mentioned GPS. And I think Jimmy, if I'm not mistaken, somebody on your team told me a couple of years ago that GPS is not something you guys acquire at Spartan. Is that correct? No, we do not. Okay. So let's think about that for just a minute. And I don't need you to explain any further. But what it tells me, if I'm a dealer, is that my memory of the conversation before is it's mostly around compliance. Is that right? It is. That's for us. I mean, a lot of buyers will, but we will not. And that's just because on the American credit side, we do not do GPS. So if we take that into our portfolio, we're not going to have a GPS on it. It's a lot for you to have to manage beyond just the collections, too, because each dealer that you buy a portfolio from is going to have a different GPS model, a different whatever, you know, all of that. But I think what I heard is it's really just the liability element. For us, it's the compliance piece. Right. So I think that's interesting. And it says a lot to us is what it says to me when I look at the broader buy here, pay your industry and the just deep subprime segment overall. It's like that's an interesting and kind of telling thing about, you know, where we are as an industry. Obviously, the technology helps a lot of dealers justify initiating or originating a contract. They've got a new relationship. We're not in any way saying dealers don't use GPS. We're certainly not. All Jimmy's saying is if they acquire the paper, they're not going to utilize it in collections. They're not going to activate the GPS or use it otherwise in their collection process. I just find that whole element really fascinating and it's kind of telling to me about you know what the what the what the liability element of all that anything to add to that eric about gps units uh if you are going to use them you definitely need to get disclosures we see a lot of that we get in there and that just we have to remove those yeah yeah yeah those deals to look at I had another question. I'm full of them. Repos. It's one thing when a dealer has I will only sell to people that are within 50 miles or whatever of the dealership because it will be easier for me to collect the collateral if the customer defaults on the loan. You're all over the U.S. And, you know, so it's like your range is the border of the country, just about. Might not stop there. Might not even stop there. So, you know, what is, is it something that when someone defaults is putting an effort into repoing the vehicle something that you guys do? Yeah. I mean, how much effort is put into that is just the question. Because it just seems to me that that's a lot. Or do you just have your own like internal secret sauce? It's like we can find the stuff. Jimmy came from special assets before he was at Spark. Yeah. But that's just the normal service of a portfolio. I mean, there's no like mileage or like radius or area restriction for us. I mean, we're going to just go abide by the collection laws of whatever jurisdiction that vehicle is in. Sure. So a separate thought for me. Did you have anything to add to that at all, Eric, before I jump onto something else? Really what comes to my mind is the 50 mile radius in general thinking of a dealer to me is I think that's a little bit old school just because back in the day they would they would have dude with the truck. repo and their stuffs around the area. You know, these days you need to be using somebody licensed, bonded. You need to vet your repo people just like you really need to vet them. And so, yeah, that's actually, I think, a reason a lot of dealers, well, in our case, do the servicing is because it allows them to sell beyond a certain boundary because, Jimmy, and we, I know we have repo agents all over the country. Yeah. Okay. That's a big part of this business is cultivating your, your Rolodex is using the old term of, of repo. I mean, you have to, some will get hot, cold, have employee issues, whatever equipment issues. Yeah. So. We're old enough to understand Rolodex. We'll expand the comments for those young listeners. It's like a rotary phone. My wife and I have been watching some series. Anyway, this lady wanted this. Her big value was her Rolodex, and they were all trying to get her Rolodex. I'm watching the same show. Oh, oh, oh. Yeah, I know what you're talking about. Oh, yeah. palm ariel mm-hmm yeah that's fun yeah that's awesome that's our audience some of them are younger and so we will explain that to them later well it's netflix you're all interested in netflix so you know I think what I'm hearing is we could spend a lot of time here I think what it what it you've you've kind of already addressed some of the biggest pieces that I wanted to cover you know if I asked you each you know, what makes paper ineligible. You've touched on some of the things. It's going to be kind of inconsistency, right? It's going to be noncompliant. Like if there's some stuff in there that doesn't seem compliant. The other things are things that aren't necessarily going to make you pass on the paper. We didn't cover, but I'm sure you're either going to exclude paper that is delinquent, right? If it's past due at the time you're acquiring some paper in bulk. Go ahead, Jimmy. Or either you're going to pay less. You may choose to buy something over 20 days, over 30 days, over 45. I mean, it's just going to impact the price. Okay, good. And then, you know, so I'm trying to help dealers think about what would keep their paper from being liquid, right? That's going to limit the market, you know, in terms of potential buyers on the paper. So that's certainly going to be among the things. And, you know, you heard a couple things there that are making the paper more valuable. So, you know, LTV will be amongst the things to consider. consider why because it it's a predictor of success on the on the likelihood of customer make at the end of the contract eric touched touched on it want to see the customer make at the end of the contract we we like to see that too that's that's customer success that we think is good for you it's good for the dealer who bought you bought the paper from it's good for the consumer you know it's like that's what we like to see and so that's part of what we spend our time talking about Uh, just a quick thing on, on kind of early attrition, like, um, Eric, what do you, what do you guys see? Is there some allowance for, you know, when, when that paper transitions, obviously if you buy a con a portfolio in bulk and you bring over 50 contracts, is there some, something you can share with us about what the anticipated fallout will be from that just in the first 60 days or so? In the first 60 days, if it's, I'll just put it in these simple forms. If it's just to say 50 accounts, um, In the first 60 days, we expect three to four of those accounts to kind of fall off and we put that into our pricing. So, right. Yep. So hopefully that answers the question. Yeah. I would think there would be some allowance for that. Yeah. Go ahead. One thing I was going to add to that we really hadn't talked about that's important to us as the payment amounts, you know, we see a lot of portfolios where the payments are just crazy high, you know, and especially right now that's tough on the customer. So, um, So I was just going to add that. I think that Jimmy kind of touched a little bit on that by just saying the deal structure, which is part of that, but without actually calling out payment amount makes a difference. Payment amount makes a difference. Some DMSs, I wonder, do you get the income? Like we're used to leaning pretty heavily and advising dealers to lean pretty heavily on payment to income ratio or PTI, payment to net income ratio. And so you can see the payment, but do you always see the customer's income when you acquire the paper? We don't. I mean, we see what's on the original credit app, but I may have changed six times. Interesting. Same for you, Jimmy. Yeah, it depends. Nine out of 10, we don't see it. If it's a really large one we may look at, we may ask for that information if they have it. But in most deals, we're not going to. It's so interesting. I had a meeting with the dealer earlier this week where they don't have the income. They have it in their CRM where they work the deal. And then when they contract the deal and push it over to the DMS, they don't necessarily take the time to enter the income information. So now it's like, you know, a big undertaking to go figure out. That's an important piece of information. I mean, yeah. Yeah, if any of us want to analyze PTI, we would first have to have the income to be able to get to a PTI ratio, right? But then to be able to go analyze that going forward. But we do recognize that, you know, when a loan is originated to where you buy it, if it's like six months, 12 months, That could change too. So we know that most of our customers are not, many of our customers are not exactly stable in their income. Just a very general broad statement is we, and it's tough these days with the price of cars and all that, but if we see a portfolio that averages more than about $450 monthly per type payment it's just we have customers for us if it gets above that they struggle yeah no matter where they are what income yeah that's been consistent for how many years about that price range yeah it used to be in the three upper 300s for us so we reluctantly keep moving it up but now we say it's 450 okay They're very much interested in that. For us, they don't collect that as well. Yeah. So let's see. I think I'm trying to make this the last question. I'm just trying to, because I think what we can do. Good conversation. So thanks, guys. We appreciate you guys coming and adding your contributions. Before I even do that, let me make sure and take a moment to make sure folks know how to contact these gentlemen. Let me start with Jimmy up here. Let's make sure I got this right on the screen here, Jimmy. I've got james.rambo at acexceptance.com. That sound right? That's it. That's correct. So that's how you would reach Jimmy. And in addition to bulk buying at Spartan, be aware that one of the things that Spartan does is lines of credit for dealers. So when a dealer gets to a stage of business where they want to go, you know, add a line of credit, Spartan and Jimmy would be certainly among the people that we would recommend that you talk to in order to explore that line of credit. And then with Eric, I'll get your email up there, Eric. So Eric, I have Eric at AlamoFinancialCorp.com. That sound right? Yes, sir. So be aware that Eric's company has a really great program on servicing. So just know that in addition to the bulk buying stuff that we've talked about, if you have paper to sell, you can certainly reach out to Eric. But also, if you're just looking for somebody with a ton of experience to service your paper... then just know that you know if you're tired of the collections headaches you know that's something that just be aware that jimmy's company does that and I'm sorry eric's company does that and I can say that um that is something that we had a chance to meet some dealers uh that work with you eric and I can say that it was it was quite telling to me that they knew like all your people they knew all the names of all your people that relationship is pretty close it's still long before you work very closely and that's probably the most successful scenarios when you do have that kind of collaborative very very happy they were very very happy it's like man I don't have to deal with that anymore and we know all the people so you know and we know a lot of people out there are that's another conversation that is happening is outside servicing and so um Yeah, for sure. So what did we leave out of the bulk conversation? Jimmy, let me come back to you. Anything that dealers should know if they're getting ready to or they want to think about making their paper most valuable or they're moving towards selling some paper in bulk? I think we covered most of the topics on at least a basic level. So I think we hit all the high points. Good. Perfect. And then, Eric, anything we left out? Anything come to mind for you? I thought of something. Oh, just be aware. Dealers should be aware of deferring. payments or taking partial payments. So we see that a lot. Dealers will say my current, you know, my delinquency, Jimmy touched on earlier, is really low. My customers pay on time. Well, during our due diligence, it comes out that, well, why is 90% of your portfolio past due? Yeah, they've made a payment. but they're past due. And so that's kind of a red flag. So be careful of that. So the next follow-up question would be, does your collection supervisor has the authority to defer payment? What you'll do, you'll re-amortize the loan. Does that match up with where it should be? And then what's the difference? Oh, yeah. I've deferred the last nine months of payments. Yeah. Why do you do that, Mr. D? Well, it just makes me feel good on a Saturday. No, I'm kidding. That's obviously I'm being facetious, but it's right. There's truth to that. I'll tell you what I do hear a whole lot to that question is, well, you know, I'd rather get 200. That's all I could get. Or I'd rather get 200 than nothing. You know, and we're like, well, you need. have a better plan in place for that. I definitely want to have Eric back to talk about that very subject one day, because I know that they have a different practice than what we hear typically across the industry. Around what? Around collecting full payments versus deferred. And so I think it's an interesting thing for people to understand. I'm writing it down. We don't have enough time to dig into all that today, but I'm glad you brought that up. That's a significant thing for folks to be aware of. Yeah, I appreciate you gentlemen making time to cover this. I think our listeners definitely picked up some new information. We're always just trying to make sure that, you know, we spend a lot of time talking about enterprise value. And even if the dealer is brand new, we ask them to think about beginning with the end in mind and think ahead to even to exit. Like, what's this? What are we trying to create here? What are we trying to build? Is it going to have value? Is it going to be marketable? you know is going to be transferable to somebody else I mean these are all things that we want to kind of know and obviously portfolio value is going to be you know kind of central in a lot of that and so so I'm again I'm glad you guys made time to talk and uh we uh we appreciate you uh and your contribution so we'll we'll have you back again we enjoy having you here so Oh, thank you. If y'all want to stick around backstage so we can say proper goodbye, if you have a couple minutes. If not, I just publicly thank you so much, gentlemen, from me too, as well. We're going to put you guys... Interesting. Backstage? Oh, you're just frozen? We're frozen on our side. So they may still be hearing the audio. So we'll just explain that we're just kind of frozen, may have a streaming delay. So just stand by. Looks like it might be freeing up, Michelle. Okay. Yep. I think so. All right. So I think I just, I just, I, and I feel like I'm frozen again. So we have a, this is the first time we've had this kind of situation with our internet. We're going to do this and we're going to do. Hey, everybody, if you're still there, thank you so much for joining us. We will see you next time on Monday. And we really appreciate you being a part of the show today. So I'm going to go ahead and just do the things that we normally do to close out the show.
