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, happy Friday. Time to do another morning show. It is time to do another morning show. It absolutely is. And yeah, just like I'm ready to rock and roll for. Yeah, it's fun how everybody's kind of shifting, you know, into. You know what I'm really grateful for? Tell me. Is that I don't use a checkbook anymore because the biggest challenge I had was January, February and remembering to put twenty like the new year. It was always dated from. So I'm really glad it's like made my life easier. Yeah, for sure. Congratulations. Thanks. I mean, you know, small things add up to, you know, happy times. Yeah. No, it's definitely nice to be shifting into the new year and you're just seeing people with their attitudes and kind of... you know, kind of using it to recalibrate their direction and, and it is, you know, a lot of questions and things. I, it's been fun to watch some of the social medias. People were like, this is where we ended up for the year. And this is the kind of growth. And this is, and so there's a lot of celebration around that with, you know, that I'm seeing people talk about. And I've, I've seen some that say, Hey, how was your December? There was one post that was like, how was your December compared to last year? And I think Jack Carter was like, it's exactly the same as it was last year. so yeah yeah so on that subject about you know shifting into new year we have uh we set for the end of january our v-eight mastermind we're doing our first mastermind thing and uh so it's uh it's going to be around dealer's business plan for twenty twenty five and we're gonna have other members come in and kind of help critique and and assess the plan and and it'll help I'm sure it'll help them with their own plans you know so it'll be a it'll be an interesting format we're looking forward to getting started on that so Absolutely. So that's, if you are interested in doing something like the V-Ape Masterminds, you have to be in a home group. Yep. So just reach out and we can get you hooked up on that. Absolutely. All right. Shall we dive in? I think so. Let's bring in Mr. Brent Carmichael. People know Brent. He requires little introduction. Yeah, very little, very little. Well, he's, uh, I, I think Brent, I, and when I wrote the description for today's, uh, appearance, I, I said, I want to, I want to go back a little bit. We know you're just, um, stepping down from a long tenure. Was it a full nine years that you were with them? Uh, just over eight, eight. Yeah. Gotcha. Okay. So back in October. Yep. And, um, But you were in the buy here, pay here business. Obviously you're stepping into the director of education seat at NIADA starting next week. And we, first of all, congratulate you again for that move. That makes a lot of sense for you and for NIADA. And so we're excited to see what's gonna come from all that. And I know that you, because our audience here is Buy Here Pay Here, we know that you have moderated many Buy Here Pay Here groups over the years, and you were in the Buy Here Pay Here business before you became an NCM moderator. So I would like for you to take our listeners back to kind of what that career was. What else did you do besides the car business? Actually, I've only had, I guess, technically now. Well, first of all, Happy New Year to you guys. Hope you had great holidays and thank you for the opportunity again. Great to see you guys again. It's been a while. NIADA will be only my fourth job as an adult since I left college. And I started out with a deep subprime finance company called Security Finance years ago as a branch manager. and was promoted, ended up being a regional manager for him. And due to a job my wife got, I left that position and got into buy here, pay here as a finance manager in nineteen ninety six. So I left college in eighty nine. I was in deep subprime finance and then got into buy here, pay here as a finance manager in ninety six, promoted to a vice president of an operation in ninety nine and operated it until two thousand and seven. That company got bought out by a publicly traded company. And Jim, I know you're familiar with large companies. I wasn't cut out for public life. I mean, it's just completely different. We were, I think, two hundred and forty nine, two hundred fifty employees is what we had grown to. And I just wasn't cut out for that life. Was a member of an NCM twenty group as well as a lead twenty group as well. And when I resigned, I sent a resume to NCM. but they were nice enough to give me a job. So again, the three jobs that I've had now going on my fourth, and I've all been in deep subprime finance and sales in some form or fashion. So it's not a very illustrious resume. It's pretty much the same job for part of what will be, this is my thirty sixth year, I guess, going into the deep subprime industry. So that just makes you like a subject matter expert on just about everything and buy your pair. Expert meaning I have made every mistake humanly possible. Wrong way multiple times. That's what makes you an expert, not success. It is. I love that. I love that. Yes. Well, we do learn from our mistakes for sure. And I think or if we're paying attention, we do. Right. So otherwise we run the risk of getting stung again. But I think I was thinking about the matter of your career in moderating twenty groups, because even if you had never set foot in a buy here, pay here dealership before you became a moderator. The things that you would learn from moderating the countless number of meetings that you have done across eighteen years and and what you learn from just being in that room as the dealers, you know, obviously communicate with one another. You've you've seen a ton of stuff in your capacity. And this is what I always say about Brent. You're just you have a hard time finding anybody as deep and wide of experience as what Brent Scott just because of those those meetings alone. And I actually have been out and done consulting. And I was also thinking recently, Brent, that one of the most educational experiences for me in coaching and consulting was when I'd go out and do a visit and you would have multiple locations and maybe you would visit each of the locations in the course of that visit. And you would see the differences in the way that they're managed, like what you would learn about actual day-to-day operations and management and how that varies. It's just so educational for me. I'm there to educate, but I'm learning as much as I'm teaching often in those experiences. And I'm sure you've seen the same. oh by far and like I said when I when I went to work for NCM again we were a very successful company so we kind of thought we had it figured out and then being on this end of it for so many years you I'd be like well if I'd have known then what I know now right kind of human experience in general we could have been way better than what we were even at that point but uh again there's never a dull moment I mean all the meetings even after seventeen years are all still different. There's always something even I as a moderator pick up that a dealer has done or hasn't done or one of those things that I go, that was a good idea. Where was that when I needed seventeen years ago, eighteen years ago? So, yeah, never a dull moment, always something new, something sometimes not completely legal, I guess, for some of them, but a lot of fun. Yeah, yeah, I follow that. And one thing, too, I want to throw in about Brent that I know that says something about his background in management, even when he was in college. In college, he played baseball and was a catcher. And anybody who knows baseball knows that catchers are – game managers certainly at the college level and so there's just a management thing that goes along with that it's part of what has served brent so well uh you know in his career and so one more reason that you know just for those folks who know what it is to be a baseball catcher I didn't do it but I've seen a lot of good catchers and I know the difference what it takes to do that well catchers are the only ones that do that but nobody else wants it that's how you end up a catcher nobody volunteers Nobody wants to sit back there and get beat up. It's like, hey, it's kind of like being the last one to pick and kick ball. I was the last one picked, so therefore I was the catcher. It's just what was left over. You're being modest as usual, but that's a difficult, challenging position. You're right. Being a backstop, you get beat up, but you do learn a lot. You manage a lot of the game that is baseball. That's a pretty fascinating part of your background for me. Let's talk about NIADA. I've got a couple of things I want to ask you about specific to a thread that was on social media recently. And so I want to, I want to kind of drill down to that because I think it's going to give our listeners a real sense of kind of some of the fundamental stuff about buy hair payer. But before we go into that, I just want to hear about, you know, your thoughts as you step into the role with NIADA, what are you looking forward to? What do you, anything you can share with us about what, what's on the kind of top initiatives? well like I said looking forward to everything to be quite honest with you and again bittersweet leaving a company as phenomenal as ncm after the seventeen almost eighteen years of being there um so again great relationships there learned a lot but really looking forward to this next chapter being able to to kind of put my focus on the industry that pretty much has given me everything that I have or everything that I know at this point so kind of gives me more of an opportunity to give back than I would have had it in cm so looking forward to all of it obviously it's a big transition right now um I mean everybody knows there's been quite a bit of turnover at niad over the last we're working through those issues there and again just making sure that You know, we take care of the association in general, but also the members, not only of the twenty groups, but the members of the association. So I'm drinking out of a fire hose, which is a good thing. You know, never a dull moment at this point. First day on the job. And oh, by the way, conventions coming up. We need this. You know, we've got ten, twelve, twenty group meetings coming up this month. Getting the education planned out again to start making sure that we get those boot camps out and provide services for the association. The to-do list is very, very long at this point, but again, very exciting. I'm really looking forward to the challenge. got a great team at niada as well everybody that I've had the opportunity to meet so far a lot of them I've known for quite a few years obviously jeff martin being uh probably the key reason to lead to this transition uh was jeff and the opportunity to work with him because all the great work he did at tiada so looking forward to you know teaming up with him and everybody else um and kind of taking the association to the next level so um Nervous, yes, but a positive nervous energy. There is a lot to do. I've got a lot of things I would like to get accomplished, but You know, we'll see. We'll see. Looking forward, it's going to be a bright future. We know that. Yeah, absolutely. We shared with you before we went live that we have a conversation schedule. We've got a virtual recorded session coming up in mid-January with Paul Folletti, the NCM CEO, and Jeff Martin. So we're going to actually have a chance to speak to them together and talk about, you know, have them share what they think. Will, about how the transition came to be. I mean, this is a big move for NCM because as I understood it, they're now exiting the buy here, pay here space altogether. Of course, when you leave the building, isn't that what we understood? Yeah, I mean, that's to help facilitate the move. And again, like I said, I can't give a call enough uh praise and enough thanks for being open-minded enough to to allow a transition like this and jeff martin on the other side again for both of them to want to work together on something like this and I think that the main thing was for both of them is they wanted what was best for the industry right and I think we all understood that we needed to consolidate it in one place and obviously niada is really the best place for that with the current infrastructure and being the the association for independent auto dealers in the first place so um again kudos to both of them for being open-minded enough to even think about doing something like this and um and again I think they were both from the right place it's what's best for the industry in general so yeah again but like I said it could have been a very short and sweet conversation and like I said I think ncm understands that their main their bread and butter is the franchise side is the oem side I mean that's where they started you know they kind of wrote the book on twenty groups started in nineteen forty seven been doing twenty groups now for Oh my gosh, what is that? Seventy eight years. They've been doing it's been a majority of have been franchise. So, you know, that's kind of their main focus. And like I said, the independent space now gets probably what it's really needed over the last four or five years. Not me. I'm not saying that. I'm just saying a focus where it's kind of all under one roof to a certain extent where we can really help the independent dealer. So does this make then NIAD is the only place you can go for a twenty group then in the end? here for independent use to the best of my knowledge yes they're good it's going to be yeah it was and so it's it's kind of been the idpp thing for a very short amount of time but yeah I think that's probably the best for the industry as opposed to four or five small players and that way we can aggregate the data you get some obviously some better information when it's Yeah. Very cool. You know that we're all on board for like, if we can pull data together and help dealers make better decisions. Yeah. Yeah. We're always trying to get information in front of people and let them make the decision. Right. So I'm excited that that's, that's, that's an exciting proposition. It's like, okay, so now what do we want to do with it? It's like we're all under one roof. And so now where do we want to take what Dealer Twenty Groups do? Well, not just that, Michelle, but it's also just the education in general. We have a certified master dealer class that's going to be that's going to come out again, not only for the independent dealer, but for buy here, pay here as well. You know, regular what we're called boot camps with the NIADA that we're going to be able to provide that kind of education again. Which is something, Jim, you know, this is something that the industry's needed for a while. It's been kind of fractured, similar to the buy here, pay here space. It's been kind of fractured. And hopefully with this move and the great people that we have at NIADA, we can start providing really what the independent body has needed. Awesome. I like it. You might as well know we calendared our first certification course at the end of February. We've got some dealers coming in and bringing them to Utah for that. We're going to start to put some silver badges. That's one of the big things on the big things that we're moving forward with is the certification and all that that means. NIAIDA White Hat way, it's like, we really want to just help dealers to get the resources and help them be better and help them have a, you know, a cleaner or tighter ship and, and all of those things. So it's like, I love, I love where the transition of you moving to NIADA is taking the industry. It's pretty exciting. And I think, yeah, and what we have a chance to focus on over there is kind of what we do with YWA is we really challenge dealers to think about the long game and what it means to how this decision affects on the line. And also just kind of what it means to be an asset to the community as a business. So some of the more intangible parts of our industry. So that's part of what we'll be focusing on. We're excited to get that going. To our topic of this thing, I want to ask your opinion on this social media thread, and I should find it and just read it. In fact, I'll just do that. I didn't get it where I could share it on the screen, but let me just kind of read it so that I make sure I've got the phrasing right. Because we had a dealer... that we know, this deal, this thread went out on the BHPH Success Group, which is the largest Facebook group around for buy here payers. You might want to give just a little bit of, just a tidge bit of background is that this dealer does independent and buy here pay here on their lot. So they're kind of, they're probably, they're heavier in retail. I think they target doing around fifteen buy here pay here deals a month. But the question became, and it's really out of frustration around mechanical matters, that they, you know, began to say, I think I need to create more separation between my RFC buy here, pay here, you know, versus my sales lot. And so that just kind of raised something for me that really goes to the heart of a lot of the fundamentals of buy here, pay here and what dealers who are new to it, as you know, They don't fully appreciate until they're deep into it what is required in buy here, pay here. Maybe required is not the wrong word, but certainly we have benefit. We see better collections results when we do certain things in the buy here, pay here aspect of our business. And so I just wanted to get your feedback on this. Yeah, let me read what it said. It said, anyone here made the switch from a traditional BHPH model to a traditional finance company? I have a large retail presence thinking about about just financing the subprime deals instead of just giving the fees and discount to the alternate, you know, the indirect parties out there. would love people's opinions. He said, thinking eight thousand dollar ACV, fifteen hundred down B tier and up good customers, not even tell them I own the finance company. So obviously, when you when you think about B tier and up, if we put that part aside for a moment and said, you know, if it's a if it's a prime or near prime customer, then that that is a little different. But I think for today, I wanted to have a chance to break down your advice, especially on the real fundamentals about If I'm a new buy here, pay here dealer, how would you be advising that I handle the collection side? And why would you think that my success in collecting a poor credit consumer through a small RFC portfolio might be more successful than some independent or some third party indirect company that's collecting from Cuba? Or are you seeing that it makes more sense to do something like that? Well, like I said, this is, you know, the good or bad thing about buy here, pay here collections is that it is a relationship based, right? I mean, we took them directly. The day we sold them the car, we knew we were going to have to collect them. And so that started a different relationship at that point. He's talking about basically doing the same thing. It's not letting him know that it's him, that he's the finance company, which will get that. Well, I bought the car from you. You have to do this. No, no, no. That's CAC or that's Ally or whatever. You have to deal with them. know if you own the finance company you still have kind of taken him to raise to a certain point so there's really not going to be that much of a separation there you're still going to have to decide what are you going to do when the vehicle needs repair are you going to you know in current buy here pay here environment rfcs we put that on a side note if it's not covered under a warranty you know ally doesn't do that ford motor credit doesn't do that for you excuse me if your car breaks and it needs a five hundred dollar repair they say okay your payment still do so um you know again depending on the tier of customer if he's talking about You know, a B, buy here, pay here B, a deep subprime B or an actual B. um you know the first thing that I heard when he says b tier customer an eight thousand dollar acv with fifteen hundred dollars down is not going to get a b tier overall customer it's not going to get a six hundred six fifty six seventy five customer he may be talking about a b tier buying your pay here I think we can let's operate on that assumption yeah yeah yeah so um I've got a lot of dealers currently that under their rfc they're starting to take on outside paper from other dealers I've had a few dealers who have an RFC that have collapsed their retail side and are just a finance company now for dealers kind of in their market area where they're picking up know kind of onesie twosies from either new car dealers or independent dealers in the market where they've now become one of the list of lenders um that they're doing because they wanted to get away from the sales side of the business the inventory acquisition the reconditioning of the car those kind of things which is probably the tougher part of the job right now to be quite honest with you I think it's harder to buy cars and recondition them now than it is to collect the customers And it's always been the opposite of that in the past. It's always been easier to get the inventory and fix it and get it ready to sell than it was to collect it. And so I think that's why you're seeing a lot of people look at, hey, maybe I just want to do the finance side of this business and not worry about the sales side of the business. The only negative I see to it, Jim, would be the cash that it takes to actually do that. Now, he's wanting to keep it in house. But if I wanted to be a standalone finance company, you know, I've got to write that dealer a check within thirty days for that deal that I bought. And as a buy here, pay here dealer under the IRS code, not a CPA, don't play one on TV, but I've got ninety days to buy that deal over from the sales company to the related finance company. So I've got a little bit of float with my cash there that I wouldn't have if I was a standalone finance company. And I've done the pro formas for dealers for both. And it is a substantial More of an investment to just be a finance company than it is to kind of sell the car and finance it both. But it sounds like he's wanting to do both on his retail side, just be a lender on his retail side. And again, don't see really any negatives to that at all outside of be prepared for the collection side. He's not currently in the collection business. Make sure that he gets some feedback from somebody who's been there and done it. because it's not as simple as you know ford motor credit and gmac make it look we do have to make phone calls there are the bad side of the business where vehicles have to be converted so you know I'm always what you might call an optimistic pessimist, hope for the best, but prepare for the worst. So, you know, here's the bad part about this, right? You're going to be making delinquent phone calls. There are going to be customers that are upset with you. Are you going to be the nice collection company that does help them with repairs and do some of those things and make all of those decisions first? Because it will affect um the capital that you need to to run that finance company but um the only other thing negative probably right now is the cost of funds right until it comes down a little bit more it's kind of expensive to run a finance company right now to be honest with you I mean when you're probably paying eight percent for your money out there still to a certain extent and we've always wanted in the past And Jimmy knows because you've been around for a long time. You know, when I got in the business, the interest rate that you charge, you wanted to be at least three times what you were paying for your money at that point, right? Because we were dealing with a deep subprime customer and loss ratios were a little bit higher. So to make sure that our profitability was there, you know, we wanted that three to one spread and you can't get that now. At eight percent, there are very few states out there that you could charge a twenty four percent interest rate on some deep subprime papers. So, you know, A little bit more pressure, I guess, right now to run a finance company just from the financial side of the business than there has been historically, but nothing else out there that I would see that would really make me run away from it. No, but like I said, I've got more interest in dealers wanting to just be a finance company than do the sales and finance side of the business. His post is very relevant to what's going on right now. and I probably didn't phrase the question well enough because I know this dealer I have better understanding what he's actually setting out to do and and his he already is buy here pay here and has about a hundred contracts and has has experience collecting I think most of what's happening with him is out of frustration Especially with the mechanical side. I saw in particular something the other day where a customer gave up on the car and it turned out just to only be out of gas. So there's all this stuff that is kind of frustrating around that side. And I think his objective was really to continue to do self-financing and a buy-here-pay-here structure. but to have it look more separated from his sales company so that he could create that degree of separation. And so I just think even if you do that, what we have to be prepared for is how we manage that RFC or that company, even though we want to keep that degree of separation, because I think you use the word conversion. I'm assuming you're talking about the situation where we trade a customer into another car. Is that what you were talking about? Or actually having to pick one up. And again, it's been a struggle for a lot of dealers that I work with. They do want that separation. But then again, you kind of need the relationship with the sales company to a certain extent at least with our customer base that's been my experience anyway when I got into the business our our finance company is called star hickman acceptance corporation well you know they were like well that's somebody else we don't have anything to do with them whatsoever well some customers that caused the problem right well I bought the car from auto master but you're telling me I have to talk to star hickman acceptance corporation well it was kind of weird because a member of star hickman acceptance was in the dealership they were the one taking the payment so you know it was kind of a hey wait a minute this doesn't make any sense and then to try to separate it it's kind of an us against them mentality so there can be a little bit of that that goes on um with it that could be a challenge um the customer my my experience tells me the customer problems don't go away whether they know you're one in the same or you're not If you're going to deal with a specific type of customer, they're still going to give up on the car when it runs out of gas, whether they know you're affiliated with the sales body or not. The whole conversation, Coffee Talk, we always go deep into whatever the topic is. We talked quite a bit about the benefits and drawbacks of separation. From my perspective, as I watch, I am by no stretch an expert in buy here, pay here. Some of the things that I'm seeing is... Even having your shop on site where people are seeing cars coming and going and getting fixed and all of that creates an expectation. Just like when the RFC is in, as we help dealers bring in an RFC, it's like there are certain things you have to do that government is requiring you to do, separate entrance, all of that. And if, like you just said, if you're coming into the dealership and making your payment to the whatever, and it's like there may be a door that's separating the two, but it's basically everything's always open and we're back and forth and all of that. That if your intent is to have a separation, where I was kind of going is like, it makes sense that there be physical separation, like real physical. And I've seen some where they... They figure out how to do an ATM in the dealership. And so if you're going to pay, you're going to come over here and do that, and you can still talk to the people there and all of that. And so it's like, from your experience, when you don't have, when you don't have those layers of separation, does it cause more expectation on the side of the customer? And is that something that is a good idea for a dealer to figure out how to mitigate that? Yeah, that's a great point, Michelle. It is. You're right, because they're going, well, you are one in the same because you're here. Now, moving it out to another building isn't going to solve the problem necessarily at that point. But it does at least, hey, we don't have to go through this again in today's age where you've got a lot of electronic payments. there's the set the physical separation is probably not as necessary as it would have been ten years ago when you still had lines of customers coming in on Friday and Saturday to make payments in person now and it's a challenge for us now a majority of these customers are making them automatically online we don't really have that much interaction with them anymore so the separation part of it probably not as important anymore I think I'm still kind of old school I still think that this is a relationship based industry to a certain extent so us being one in the same helps um from a sales standpoint I would love there to be a separation hey that ain't got nothing to do with me your payments are them if you have a repair problem that's them I love to being able to pass the buck um I'm sorry um defer to somebody else everyone do that sorry um and even from a collection side it's one of those well hey you know that I don't you know that was the sales department that's not us so you know both sides I think enjoy a little bit of that separation but if they were completely honest I think they would both say yeah I kind of like the fact that you know we do say that we are one in the same company. But it is frustrating when customers just want to give up and you think, well, if I separate this, will it reduce their expectations? I don't know that that's the case I have some larger dealers that have finance companies that are nowhere close to a retail facility uh the same ones their shops are not part of retail facilities it's a standalone shop somewhere else so you don't have the hey I see cars getting worked on why can't you get mine in kind of thing does it mitigate the problems I I don't think so it just creates little different problems I guess with that because then you're going to have a customer that has to take a car to a facility that's offsite and maybe they don't wait there. Maybe they drop them off. They do want to speak with, let's say, an account rep from a collection standpoint in person. They've got to go somewhere else to do that depending where they are. So I think it's just a different set of challenges with those. I haven't seen it mitigate. I haven't seen that that model works any better from a metric standpoint, which I'm a numbers guy. So if I look at somebody and you're going to do it this way, show me on paper. How that way is better than some other way outside of just intuitively what that feels like. Again, I think it's just a preference on one of those. If you separate that finance company, when we got big enough, we had to just because of size. We just didn't have room for the collectors in a facility, but probably would have kept them in one because I'm a cheapskate. I don't want to pay two rents. moved them out had regional collection offices did we get any better no when we centralized our shop did we get any better no um not really it just caused the different challenges that we had how do we get the car to and from if the customer wants to speak with us in person then you have to go to this address so just different challenges but we didn't see anything marketable but again seventeen eighteen years ago and the dealers I work with now I don't see anything that I would point to to say yeah I think that's the way you need to go with it I think it's just a personal preference yeah I have one more way to ask the question that's going to be um kind of I'm going to zoom out and I'm going to ask the question in a way that thinking about that most of our listeners on the morning show seem to be newer dealers right they're they're newer to the business and and this becomes a you know a spot for them to learn a few things often and so If I asked a question differently, if you think about the, if the customer that we're financing is truly a, let's just call them a buy here, pay here customer, you know, forget the labels of prime, non-prime and credit scores and all this stuff. If we think they're a buy here, pay here customer. then I would ask you to kind of help our newer dealers or somebody who's just listening and contemplating buy here, pay here. Like what's going to be different for me to set up a finance company for buy here, pay here collections versus some, uh, third party who's you know in another state trying to collect on my customer from a distance like what what are the benefits that I can experience as a as a small rfc in a small community serving my customers through that arrangement versus some distant indirect lender so let's talk about that piece of it for a minute I think it's the customer service aspect. I think when it's smaller and local, I have the ability to treat Michelle as Michelle and not contract number, just another signature on a contract. I think when you separate them too far, that's kind of what you get to then it's, Hey, your payment was due here. This is how much we need. Well, my check was short. Your payment was this, it was due on this day. I think you'd get more of that. with the separation than you do with, hey, Michelle, I understand. What is it you can do today? And I think you kind of that's where that can lead, depending on the size of the scope. Obviously, if you stay small, you can still have that. And again, in today's environment where everything is virtual anymore, you know, I'm going to have to give up my old school ways or I still think that face to face connection makes a difference in collections. It's not as much anymore. So having an offsite or a completely separate finance company somewhere else is probably not as much of a negative as it used to be. But I still think at some point you'll lose because if you do that, some of your policies and procedures will change at that point on how you deal with customers and what you're willing to do to help them when you're not somewhere close where there can be some sort of direct interaction with the customer. So that would be the only thing that I would think that it could lead to at some point. I could treat Michelle as Michelle, as a customer, not as a signature on a contract. I think that would be a challenge if you completely separated them and just kind of went with, hey, I'm just a finance company. That's all I am. Yeah. Okay. We've got a few comments that have been sitting there waiting for me to do something for a while. So I'm going to just, oh yeah, no. Rudy Enriquez, he's tuning in through YouTube, says, I don't see the math problem when someone's turning in a car because it's out of gas. It's a customer's loss here. And it's like, I was thinking the same thing. It's like, Hmm. Okay. Maybe it doesn't get good enough gas mileage. Not sure. And then, um, I mean, Rudy's basically saying, Hey, look, if they don't want the car, I don't really need them as a customer. So I'm kind of on board with that. Yeah. Does it frustrate me? Yes. But if a customer is willing to give a car back for that reason, and that reason only, then, you know, either we did something wrong in our relationship with them that they felt that that was enough to do it. But yeah, to a certain extent, it's like, I mean, I've had a customer tell me I'm going to give the car back if you don't fix my back window that doesn't roll down. And I'm well, it's time for us to part ways at this point, because if that's the reason that you want to end your relationship with us, then we probably should end it now. You know, I would throw one more thing on top of that for Rudy's benefit is like, I think if there's a way to get past this now, if it's a high maintenance customer and we want to cut our losses and move on probably, but if there's a way to get past it, our ability to keep that customer is going to cost us a lot less than attracting and paying to attract a whole new customer for that same car. So if I can save the customer, save the deal and get it back on track, I'd prefer that. I think the math is going to be in my favor. Yeah. So this is one that came in quite a while ago when you were talking about at eight percent and, you know, the money we can't we can't we can't go multiples of three. And so Mario's like fifteen percent in the second one. And he's like, where can I get eight percent? He's paying fifteen percent. And when you said that, I was like, most of the dealers that we work with pay more than eighteen percent for their money, don't they? About eighteen, sixteen to eighteen, yeah. Sixteen to eighteen percent for their money, not eight percent. So I was thinking, I was like, where is he getting that? Eight percent. Most of these are going to be local and regional bank relationships that they have, obviously. And it's going to be based on and I hate to say this, but it's the truth. It's going to be based on the net worth of the owner at that point. Right. I mean, that's kind of where everybody is. And we understand that some of the finance companies that cater to our industries, I won't mention any names, start out at ten or eleven or twelve percent. um and again some of those are there to bridge you to get you set up get that three or five years worth of financial so that you can move to a different kind of a facility at that point but if I had to put a number on it holistically with all the dealer clients that I work with that do have lines of credit I would say it's got to be in the eight to eight and a half percent would be a good level average do I have some that are paying fourteen fifteen sixteen percent I do um do I have anybody paying three four Not anymore, no. So I would say the average rate is about eight percent. And again, to his point, you know, now, you know, sixteen percent, we're two to one is probably where we are at this point. So all that means is that we've got to operate a little bit more financially responsible as far as overall operational expenses. We have to be better at collecting. Obviously, at that point, to Jim's point, we've got to save every deal we can save in some of them that we may not necessarily want to. And we may understand that we're just taking the can down the road to a certain extent. But if I can kick it down far enough, down the road before it falls then then there's obviously some financial uh wins that we can make there so and I I see frequently where dealers are asking how do I get out of this because you know a lot of times when when they when they're in a sixteen percent or you know eighteen whatever it is percent interest rate that it's like I don't see a way out it's you're kind of kept on that merry-go-round and I and I see I mean, there's only two ways to generate cash flow in our in our industry right now. And it's fewer cars are cheaper. And again, the cheaper part of it is probably the toughest part. Right. I mean, eight thousand dollar ACV car. And if I could go out and do five thousand dollar ACV cars and I can afford the fifteen percent money at that point. But when I'm paying seven and eight for them. You know, it's beans and weenies some night for dinner. I get that. Yeah, yeah, yeah. And then there were some more questions or more comments from Maury. If Maury, if you need to be able to talk to an expert around this, give us a call, give Brent a call, give someone a call that can kind of help point you in the right direction for some of these some of these pieces to be able to get better financing. And then Crystal Agaio piped in. She's a friend of White Hat Way and the whole thing. We work with her a little bit. Actually, no, we work with her a lot. Based on our experience, as long as you have a well-outlined SOP and efficient employees training, having an RFC makes it easier to collect when a customer refers to mechanical issues as collectors we acknowledge and let our customer know we'll alert the dealer for warranty or repair options and the customer performs better. Our customers want solutions easier. in their situations and so communication is is is key so and you know we we are a huge advocate um for sops and you know yeah that it's it's kind of like what jim was talking about earlier you go to all these different satellite places and they're all run differently and and it's it's, it's harder to, to keep your, your finger on the pulse of your business in general when that happens. And so SOPs love it. But if you've got an SOP and have a way to be able to, like, this is, these are the avenues and the things, then it becomes much more, it's, it's something that you can just lead a customer through the process, lead a customer through the process, lead a customer through the process. Yeah, and your answers were helpful, Brent. I just say that I feel like we're, when we have that kind of, I'll call it a cozy relationship with the customer, when we can, because you mentioned the relationship part of it. What Michelle and I talk about is kind of relationship equity. You know, when we have the nature of our relationship with the customer such that we have some equity, then these little setbacks about a empty gas tank or whatever, that stuff is easy to navigate and get past whenever we have something of a relationship with them, which is harder, obviously, when you're a Westlake or whatever these big, you know, they're not going to have that nature of relationship. So I think it's one of the ways, when I just look at our industry in general, one of the ways that I feel like still, you said, you know, Like I'm a fundamentalist, right? Or I'm old school, right? So, but a lot of what those old school things are, are just, they still apply as much today as they did before in terms of one of the things that helps us to be successful in a buy here, pay your segment with a buy here, pay your customers. We can get in the weeds with them. you know, this is some of what it takes is to be able to be there, be close and work through the stuff because a lot of times they don't know how to help themselves. And so it's hard for us to function like a Westlake when we have to kind of be in there with them. Isn't that one of the reasons why, I mean, I'm throwing spaghetti at the wall, but just from my perspective, isn't one of the reasons why people get into the position that they are in their credit is because they've dealt with enough that it's like yes or no or gone. I mean it's that that they don't work with people and that just diminishes and diminishes and diminishes their their ability to be able to to get off of or to you know it just takes them down further down a rabbit hole of poor credit because when when it's just so walled in it's a yes or no or go I mean jim knows this I mean most of the customers we got the reason they had a repossession was what Had a problem with the car, they wouldn't work with me. Problem with my payments, they wouldn't work with me. And why could they work with you? Because they have tens of millions of customers that they don't have the time and infrastructure to stop and listen to Michelle's problem. Try to work out a solution, break up the payment over the next two, the next three. When do you get paid again? What does that paycheck look like? and I've worked with some of these large collection houses they're on call volumes that say you got two minutes that's all you got per phone call when it hits you got two minutes to solve the problem and it comes back to pay pay pay and that's yeah they can't pay so the car goes back and they end up dropping down a tier and end up being a deep subprime customer with us and then we get the opportunity because we are smaller that we can, based on our number of accounts, take the ten or fifteen minutes to work with Jim or Michelle and work out payment arrangements with them. Yeah. And obviously there are lenders out there doing deep subprime from a distance and they find ways to make it work. My suspicion is if we could get deep inside their numbers, their success rate is not what we see in buy here, pay here. And it's because of this ability to manage the account more closely week in and week out, right? We don't do... Yeah, it is. I mean, it is for some of those bigger ones out there when they're adding hundred thousand new deals a month and they're charged off rates get deflated as long as they continue to add that whatever it is, ten thousand, hundred thousand accounts a month. Those percentages stay low. But if that ever slowed down whatsoever, and Jim, you've seen it with some large dealers, buy here, pay here dealers that, you know, they grow and grow and grow. And as soon as it slows down a little bit, the caboose of the train comes up pretty quick, right? But as long as you're growing, you can, and that's all they do. They maintain, hey, this is the percentage we need. And to do that, we need X number of underwrites that we purchase contracts, we purchase a month. And as long as we maintain that or above, then my percentages stay where they need to be and they look good for, shareholders, whatever that you want to take a look at. That, to me, is exhausting. Whereas we've got to stay ahead of the thing. It's that sell, sell, sell, sell, sell, sell, sell, sell, sell, sell mentality. And we're going to be able to dig ourselves out of the hole we're in if we sell more cars. And, you know, we, I know for, for what, what we teach is like, that is really not a solid answer to a problem is selling more. It's like, let's get in. Like Crystal talks about, let's work on SOPs. Let's do, you know, a lot of these different things that can help so that when that caboose, if it does end up hitting that you're in a really good position and it's like, I'm okay. I, you know, I got this. I got this. Yeah. What I know about Brent is I would say the first time that he gets a chance to do his, as an NIADA Director of Education, to do his seminar on collect the payment, not the card. Did I finally get it right? Collect the payment, not the card? Collect the payment. I'm going to write it down. Anyway, when that comes up, don't say, when you see it come across your email, don't say, I'm going to sign up for that tomorrow. You're going to sign up right now and you're going to go to Brent's, you know, collect the cash, not the car. You'll probably be doing that. Won't you through NIAD, that same kind of. I'm not sure what the title will be at that point, but definitely we're going to get some collection classes, collection management, sales, sales management classes. uh shop management we're gonna we're we have a full suite of of education programs that we are going to get rolled out may not be the first half of twenty twenty five uh probably more toward the last half but we're gonna start getting uh the opportunity for dealers uh and association members to to get the training that we feel they need so you know I I before we let you go um it's like I and there's more that I haven't put up there but there are a lot there's a lot of interest in understanding how you can get money at eight percent and it's it's coming from dealers and people that are in the money realm it's like I don't know how you do that I just it's banks you just gotta yeah find out what they're well I can promise you ninety percent of the dealers I have that may be paying eight percent now at some point we're paying ten twelve fourteen or fifteen um had to bite the bullet to a certain extent for that three or five year period whatever it took to get the financials in a place where they could find um and again it's it's going to be local and regional banks guys this is not you're not going to get these from finance companies out there because that money is just not there um it's going to be a local or regional bank that um Unfortunately, you'll have to have a pretty strong personal guarantee on some of these as well. You're not going to get eight percent money on just your receivables. Those days are gone. The days of no personal guarantee are gone. So, you know, it's more, you know, being able to establish that wealth and good financial showing that, hey, you know, we know. And to Crystal's point, you know, one of the things that helps, believe it or not, is formal written process and procedure on what you do. data tracking to show a history of what you've done and being able to project what you're expected to do moving forward sure things like cash flow models balance sheet needs to be in a good position you know it's basically business one-on-one um but it takes it to the next level for us to try to go secure money on on what we're wanting to do with it so um it is there um this is going to sound shallow or hollow but I mean patience is a virtue we've all been there we all had to pay that kind of money we had to pay credit card rates at some point for our money um and then we learned from relationships with local and regional banks. What is it I've got to do to be able to move this to you? What is it that you need? Leverage percentage. I mean, there's things that you have to work on to get it there. But I can promise you the guys that are at eight percent now are making sure they're doing every single thing possible to keep their business in that position. because they know if they had to go out tomorrow for some reason they lost that line of credit would they be able to replace that at eight percent they know they're probably looking at ten and for some of those guys depending on their leverage percentage ten percent doesn't work believe it or not two percentage points different does not work the business cannot afford it so um patience due diligence and diligence uh for you Maury out there I promise you you'll get there Jim I can definitely help you definitely reach out to him and I'm sure he can work out a plan to help you get there. What I don't know. So it's all good. no we're happy to make it just because I sleep next to the person that knows all the things I think that there's stuff while we're sleeping that it just kind of you know gets injected in my brain ran a business I mean the way I mean the lingo the time she's got this down are you kidding me she's done it she knows thanks you're just you're petting my email investors and michelle's gonna run our buy here pay here for us yeah so brent's gonna do well in politics now that he's really gonna do well in politics But there's, you know, and I know that just like this whole money thing is really a conversation that we've been talking about for the last year or so. And and, you know, this one of the things to let dealers know out there is it is possible to get a bank to give you the financing. It is possible. And, you know, the temperature may seem like banks aren't interested, but if you've got the right pieces, they are. And so it's there are banks and not every bank, maybe, but there are banks out there that are interested if you've got all the right pieces. And it really does come down to those things that Brent talked about. with, you know, having the metrics, having the numbers, having the, you know, and SOPs and like being a real solid non wildcard in there, you know. Yeah, I think in the simplest form, to Crystal's point, it's like if I If if I'm going to lend to you, Michelle, in your business, then I need to see. Yeah, I can see how your business has been performing. But what can I see that tells me the likelihood that it's still going to be performing that way a year and two years from now? That's back to policies, procedures, SOPs, internal controls and all those kind of things so that you can be sure that's going to. And the sooner you can document that. Otherwise, I have to have that tremendous net worth that Brent's talking about. So my ability to get to the money, I think, sooner in my net worth trajectory is going to have to do with these policies and procedures and having systems in place that are going to be able to be replicated and continued. So I think that's part of what we can all be thinking about in terms of getting access to it. And the net worth helps an awful lot, too, is that you've diversified where your money is, too. Yeah. We've seen dealers get multimillion dollar signature loans at eight percent in recent months. I mean, in twenty twenty four. And so it's it's there. But we got to get ourselves in position to be able to be eligible for that. So. So in the meantime, go play golf with your neighborhood banker. Oh, yeah. Yeah. Build relationships. it is it truly is I mean that's that's exactly what it's about and a lot of dealers that I've worked with well a bank won't listen to me you don't know that unless you go and they just look at the model right jim you know I've talked about this before I mean you're going to go into a bank and you're going to say I need to borrow two million dollars and they're going to say what do you want it for and you're going to say well I'm going to buy a ten-year-old car with a hundred and forty thousand miles on it. And I'm going to do some work to it. And then I'm going to finance somebody who's proven in the past that they won't pay it back. Yeah. Hey, Brent, here's one of our ballpoint pens. It says Joe's Corner Bank. We'll see you. We'll see you down the road. Yeah. Well, and you know, when you put it that way, too, is like buy here, pay here. Dealers, businesses are the customer base. to a bank that like you go into a franchise and you know you you're that you're that kind of customer it's like you better it's there's the there's a slimmer chance but the more you create this uh that I'm I'm a good risk it's because buy your pay your dealers are the sub subprime kind of in the way that it's looking at for banks I mean it's just it's like too high of a risk because it is a wild card we don't know if you're going to pay it back And it's a simpler way to say it is it's really with most banks. It's not a qualifying asset. And I'll tell you this. My experience has been I've had very few. I can't think of any off the top of my head where a dealer had a line of credit with either a local or regional bank. that that bank wanted out of the business. I've seen it with our finance companies in our industry, and we've seen it from the two majors out there, to be quite honest with you, are not renewing some dealer client. And one dealer client I know had been with their finance company for fifteen, eighteen years. and got a notification that they will not be up for renewal in two years when their renewal comes up. They're not doing anything wrong. Got access to their metrics. They're an above average dealer. They're just deciding they don't want any part of that business. And I've not heard that from a local or regional bank because they thrive on those types of lines of credit that are going to pay, or I hate to say it, eight percent. And they pay like clockwork and that business is there and the bank enjoys that business. So I've not seen it yet. Knock on wood. I'm sure it's probably happened out there, but I haven't recently had any experience with that where a local or regional bank has said, hey, on your next renewal, we decided we don't want any more of this business. They're like, hey, is there anything else we can do for you? at that point. Would you like to increase your line at that point? And then the dealer's going, no, no, I'm good with where I'm at. Excellent conversation. It went somewhere that we weren't really expecting, but it was good. You don't have to apologize. You ask me questions and I answer them. Well, I am excited for the future of NIAID. I'm excited to watch where you're heading for the next few years with how you're going to be really an instrumental player in creating something that's awesome for the industry, for all independents. And I'm Just super, super excited. And, and I'm going to like, we hope that we can still call on you and have you, I know you're going to be busy, but have you come and talk by your pay here. You won't build a finding. Yeah. Anytime. And you said instrumental. I'm the guy with the, the client, the, the symbols. That's me. I'm not the orchestra. I'm just. And you're going to hear me go bang. And that's going to be. No solos, no instrumental. Just every now and then. You know, the little. Yeah. I'm the cowbell guy. Just think, think, think. That's all. More cowbell. Gotta have more cowbell. Saturday Night Live people know this cowbell reference. Brent, we just are so grateful that we know you and you're in our circle that we can call on you to have these great conversations. So thank you very much. I think you guys know that. I think you know how high a regard I hold you both in. Thank you. Thank you for everything that you're doing for the industry. So thank you thank you do you want to hold in the back for just a minute while we close up this show and then we'll we'll we you know get we're not giving you a proper goodbye yeah so all right we'll see you in just a minute okay um great show I uh I'm I'm like I really am looking forward to the things that are about ready to start yeah you know moving and And with just having that layer of Brent being part of education, it's going to be really great. And I might just mention before we close up that I'm going to put Brent's email on the – he's got a new email. Oh. And so you can reach him there. He could be like one of the first. So start filling up his inbox. Or if there's something that we can help you with too, there's how to get a hold of us all over the heck place. Yeah. But I would say, too, about twenty groups. You know, Brent's going to continue to moderate some twenty groups that are coming over that he's moderated for a long time with NCM. And so he'll continue to do that. And twenty groups are a great solution for folks who are really looking to roll up their sleeves and get deep inside their business. Fair notes with others. Absolutely. Hey, everybody, thanks so much for making us a part of your Friday. We will see you on Wednesday with another White Hat Way or White Hat Ways topic. Hope you guys have a great weekend and we will see you next week.
