Questions - RFC and Secondary Finance (Florida dealer)

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Questions - RFC and Secondary Finance (Florida dealer)

Postby russell1234.10565 » Tue Oct 30, 2012 3:30 pm

I just started work for an independent dealer in Florida. My past experience was at a small town new car franchise where I started off in sales, became the internet manager and got worked into F&I.

About the dealer I'm working for. Been in business since 1984 but never offered financing. For the past 10 years, they (two brothers own the place) have been doing mostly wholesale. Last year they did over $5 million with 90% being wholesale to other dealers. Recently they decided to get heavy into retail so they got signed up with a few secondary finance companies. We don't pull credit. We ask some basic questions and I sent customer credit applications straight to the lenders via dealertrack. Our good credit customers I fax over to the local credit unions.

We have been considering doing buy here, pay here on a case-by-case basis. This raises some questions. If we do BHPH, should we form a seperate related finance company? Why or why not? If so, how hard is it to incorporate and do? What kind of regulations are out there that we need to know about that affect BHPH? First goal is to get the customer financed but some of the finance companies are being super picky. Lastly, these secondary finance companies charge the dealer a reserve fee that is withheld from the funding. These fees force us to adjust the price of the unit sold and sometimes kill the deal depending of the call back. I have received mixed answers about disclouse of the fee to the customer. Does anybody know?
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Re: Questions - RFC and Secondary Finance (Florida dealer)

Postby combs.3602 » Thu Nov 01, 2012 11:05 pm

Hi - I have been a BHPH dealer for over 30 years,ten stores and 85 employees in two states.There is a great amount of freedom in BHPH but also a huge amount of cash is required.There are some finance companies that will offer to fund your receivables but ofcourse you give up alot of profit.We elect to keep and fund our own.It is difficult in the beginning and requires a good investment but when the payments start rolling in it is worth it.It will require sacrifice and good discipline to do this.To your second question about fees and finance companies ? I believe your state Consumer Credit Department has those rules and regulations pertaining to finance, but I believe the short answer is you cannot pass those fees to the consumer.It doesnt sound like you are wanting to do true BHPH ,but rather deal with BHPH funding companies.If you are interested in true BHPH then the Related Finance Company does help with the income tax problems of BHPH,but there are numerous hoops to jump through and alot of record keeping difficulties.We are researching the RFC as I write this.There are some good people here on this website that can answer these questions.Ken Shilson,the founder(NABD)has a very good handle on this business. Dennis Combs boise,Idaho
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