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Takeaway from Byrider Conference: BHPH Dealers Should be Prepared for Post-Pandemic Delinquencies

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Byrider is one of the nation’s leading used car dealership and finance organizations. One of the key themes from their recent conference centered on the unique state of the buy here pay here (BHPH) market. The combination of stimulus checks and loan deferrals due to COVID-19 has put money in many consumers’ pockets. This is proving great for auto sales as people feel an influx of available funds. With tax season upon us and refunds headed to many consumers, we’ll likely continue to see strong sales and low delinquencies.

So what’s the problem? The concern is that this inflow of cash is temporary, and inflated sales and low collections activity are creating a false sense of security for dealers, especially in the BHPH space. We often see loan delinquencies spike in late Q2 and Q3 after tax refunds have been spent and consumers’ cash flow normalizes – and we should expect this to be even more dramatic this year given the other pandemic-related sources of funds that many people are enjoying (i.e. stimulus checks, skipped loan payments, etc.).

The takeaway is that dealers need to be proactive in preparing for delinquencies to rise significantly later this year. Take measures now to protect your inventory from GPS tampering and be ready with tools and capacity to manage heavy collections activity.

Our DRNsights LPR data platform can be an integral part of your collections strategy during this unique time and going forward – from evaluating collectability to negotiating payments to locating debtors. If you’d like to learn more about how DRN can improve your collections and recovery efforts, contact us here.