Baby Boomer Bankruptcies on the Rise

The Administrative Office of the US Courts recently conducted a study which found that the percentage of bankruptcies filed by middle-aged Americans rose 61% in the five year period between 2002 and 2007.  By 2007, Americans born between 1946 and 1964 accounted for 42% of all filers. 

Average Age of Bankruptcy Filers

No surprise, the median age of bankruptees increased from 41 years old in 2002 to nearly 45 in 2007.  Compare this to less than 38 years of age for average bankruptcy filer back in 1994.  The only piece of good news?  Bankruptcies for Americans under 25 have dropped off steep since ’94, from 11% then less than 2% in 2007.

Causes of Baby Boomer Bankruptcy

The study felt that the housing crisis was a key cause of greater bankruptcies for older Americans.  Many found themselves with much-reduced home equity after the housing bubble burst, and some may have filed Chapter 13 to postpone foreclosure on their homes.  No matter what, this increase in bankruptcies could be a reason for the rise in sales at Buy Here Pay Here car dealerships, which have a long history of working with bankrupt individuals. 

For more information on this study, check out this news article.

Higher Delinquency Rates Tied to Lower Average Credit Scores

According to Experian Automotive, the states which suffer from the lowest average credit scores also report the highest rates of auto loan delinquency.  During Q2 of 2010, individuals financing used cars had an average credit score of 679 – this figure does not include Buy Here Pay Here car dealerships which do not check or report an applicant’s credit score. Compare that 679 score to the average credit scores in these states:

  • Mississippi:  628
  • South Carolina:  634
  • Texas:  640
  • Alabama:  642
  • Arizona:  649

These states also report high rates of delinquency.  But in better news, the overall auto delinquency rate has been dropping universally.  The 60-day delinquency rate is down by nearly 12%, and the 30-day rate by just over 3%.  That means consumers are having a slightly easier time making their payments, which is good for drivers and lenders alike.  Want more information about falling auto loan delinquencies?  Visit Subprime News.

New BHPH Dealer Advisory Council Being Formed

With the creation of the new Consumer Financial Protection Bureau (CFPB), BHPH dealers need a single-voiced organization that can open and manage a dialogue with the federal authorities.  New car dealers will able to effectively lobby their way into significant exemptions from the new governing body; not so for BHPH dealers. 

Chris Leedom, the CEO of Leedom Group and principal of several Buy Here Pay Here car dealerships in Florida and Georgia, is spearheading the creation of this advisory council.  He is planning to hold a meeting on the development of this council at next month’s 16th annual Leedom Group Buy-Here, Pay-Here National Convention.  He is looking for 10-20 key dealers to join him.  To read more, visit this news item in Subprime News.

New GPS Tracking Device for BHPH Dealers and Customers

A company called Rocky Mountain Tracking Inc (RMT) has announced an ingenious new product targeted at the BHPH dealer market:  Smart Tracker Elite.

The Smart Tracker Elite is a GPS tracking device for Buy Here Pay Here car dealerships, as well as their customers.  For the dealer, the device serves as a solution for quickly repossessing vehicles for which buyers have defaulted on their payments.  If you ever watch the TV shows showcasing the work of auto recovery agents, you know that locating a vehicle is often the hardest part of repossessing it.

For car buyers, the device can act as an anti-theft aid.  If you a dealer offers this item as an add-on, be sure to negotiate on the price.  Why?  Because RMT has made the pricing discretionary on the dealer’s part.  Although it may well act as a powerful aid against theft, it is a tool for dealers to increase their profit on each vehicle sold.  With this in mind, you have a great point for negotiation. 

Click here for more info on Smart Tracker Elite.

Ford Windstar Vans Recalled in 21 US States

Ford Motor Company is recalling 463,000 Windstar Vans of model years 1998-2003.  Apparently, there is risk that the salt slush common to northern-state roads in winter could lead to rusting, corrosion, and ultimately catastrophic fracture of the rear axle.  No matter whether you bought your Windstar from a Ford dealership, a private buyer, or a Buy Here Pay Here lot, you should bring your van into a local Ford or Lincold-Mercury dealer to have it inspected.

States Where The Recall is in Effect:

  • CT
  • DE
  • DC
  • IL
  • IN
  • IA
  • KY
  • ME
  • MD
  • MA
  • MI
  • MN
  • MO
  • NH
  • NJ
  • NY
  • OH
  • PA
  • RI
  • VT
  • WV
  • WI

For more information, visit this Yahoo News article on the subject.

Auto Credit Loosening Up?

We all know that getting an auto loan is not easy these days.  In total, captive lenders, banks, and credit unions are holding more than $30 billion less right now than they did in August 2009.  That said, Experience Automotive published news yesterday at Auto Finance Summit 2010 that people with credit ratings between subprime and nonprime are getting approved more easily than before.  If you opted for buy here pay here financing in the last couple of years due to bad credit, and you have been working to improve your credit score since then, you want to try refinancing. 

The report also named the top car lenders in the industry:

  1. Toyota Financial Services
  2. GMAC
  3. Chase
  4. Wells Fargo
  5. Ford Auto Credit
  6. Honda

For more information, visit this Car Connection article.

GPS Tracking and Credit Risk – A Development to Watch

An official for Maine’s Bureau of Consumer Credit announced this week that a nationally-recognized auto finance company (their identity was not disclosed) has been making into inquiries into whether utilizing GPS (Global Positioning Satellite) tracking to monitor vehicles they finance would be a breach of consumer credit laws.  Apparently, the GPS devices would be used to analyze a driver’s driving patterns to determine their credit risk.  Similar inquiries are almost definitely being made in other states.

Their car loan or buy here pay here financing application would be used to determine a baseline of expected driving behavior.  Then their driving pattern can be analyzed against this baseline.  Obviously, the driver would have already been approved for financing, but the new data would be used to help people or companies who buy auto loans in the secondary market.  Basically, they buy the loans from the primary lender as an investment.  If the driver is no longer commuting everyday to his place of employment, then his or her assigned credit risk may increase.

Obviously, privacy advocates have a lot of concerns here.  For more information, read this article at Computer World.

BHPH Sales Soaring to New Heights in 2010

A recent study by CNW Research Group is showing that Buy Here Pay Here car sales have absolutely soared since the economic downturn.  Between the years 2000-2007, BHPH cars consistently represented about 3% of all used vehicles sold, never drifting higher than 3.64% and falling as low as 2.71%.

Nationwide Credit Problems Boost BHPH Car Sales

With the recession, however, auto loan credit requirements became much stringent and the sales market for new cars all but collapsed.  Many consumers who could no longer get approved at a traditional dealership turned to Buy Here Pay Here financing.  Nobody else offers such easy auto loans for bad credit.  And car buyers weren’t the only ones — traditional car dealers looked to the BHPH market for higher profit margins and easier credit approvals for their customers.  After all, getting a buyer approved for financing is just as important to dealers as to their customers.

BHPH Sales By The Numbers

Buy Here Pay Here cars as a % of total used cars sold:

  • 2007:  3.18%
  • 2008:  3.84%
  • 2009:  5.21%
  • 2010:  6.37% (projected)

Total Number of Buy Here Pay Here Cars Sold:

  • 2007:  1.32 Million
  • 2008:  1.40 Million
  • 2009:  1.85 Million
  • 2010:  2.37 Million (projected)

The Mainstreaming of Buy Here Pay Here

Another telling statistic is average value per BHPH unit sold.  The average cost for a BHPH car is now around $6,000, with more than 1/3 of them being sold for greater than $8,000.  With new dealerships stepping foot into the market, BHPH is no longer the sole preserve of independent car lots, and buyers with very poor credit history are no longer the only customers.  At Buy Here ‘N Pay Here, we work with all types of BHPH dealers and lenders to get you approved for financing no matter your credit score or past credit history.  Apply online today!