Does the amount of Down Payment truly affect collectibilty?

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Does the amount of Down Payment truly affect collectibilty?

Postby MMORRIS.9191 » Tue Jun 21, 2016 8:05 pm

Looking for feedback concerning whether or not the amount of DOWN PAYMENT affects the collectability of the loan or note. Please post any feedback or sources you might have concerning this subject matter. THANK YOU!
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Re: Does the amount of Down Payment truly affect collectibil

Postby combs.3602 » Wed Jul 20, 2016 10:20 pm

Hi Morris - In all of our history we find that people vested have more interest and desire to retain their investment. The banks have based their industry on that fact. We usually think the less credit score the more down payment. That being said -It doesn't always work out that way. I have had people pay 4k down at tax time and never make another payment. I believe that a large part of that is WHERE the money comes from. I think if the money is hard earned and not given to them freely, they appreciate it more, and don't want to lose it or what it's bought.I like to ask the customer where they got their down from. If grandma or the government gave it to them I'm more concerned about the loan repayment. As far as 'collectability' ? Each person or loan stands on it's own, depending on their character, car running and ability to pay. I believe it helps to have the larger down still, but without those qualities just stated it's a skeet shoot. :D Dennis Combs combscarcorral.com Boise/Nampa, Idaho
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Re: Does the amount of Down Payment truly affect collectibil

Postby koebler1313.6760 » Fri Aug 12, 2016 1:53 pm

We are just a small family owed buy here pay here. I know from our experience it really doesn't matter how much money people put down. We have had people put down large sums of money, and then we get the car got back before the first month is up. I have not found a way to tell who is going to be good, and who is going to be bad.
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Re: Does the amount of Down Payment truly affect collectibil

Postby mallen.9773 » Tue Jul 18, 2017 2:57 pm

I work for a large BHPH dealer, retailing roughly 1500 per year. Similarly intrigued by the question you posed, I went back through five years of our records, roughly 7000 deals looking for patterns that might indicate who the good buyers would be. I evaluated many factors (down payment, ACV, payment amount, etc) fully expecting to see a trend as to what might make a deal inclined to become a repo...it didn't happen. I was particularly expecting to find down payment as the main culprit, but similar repo percentages were noted whether the down payment was $500 or $5000.
I agree with an above poster who feels that the more true "skin in the game" a customer has, the better likelihood the loan will succeed. Unfortunately, my data couldn't distinguish whether a customer's down payment came in the form of a tax check, or through hard-earned savings.
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