When it comes to buy here pay here in the state of Maine, Lee Credit Express has it covered. The BHPH operation is part of Lee Auto Malls, a franchise auto group that is celebrating its 75th anniversary this year and happens to be the largest volume dealer in the state of Maine. The group first ventured into the realm of buy here pay here in April of 1989, shortly after attending a training program by the late Jim DeVoe (who opened the first J.D. Byrider store).

A related finance company, Maine Auto Credit, was established, and Lee Auto Malls began offering BHPH at one of their new-car stores. The group slowly expanded its BHPH business to their other locations, and eventually, the BHPH business outgrew the existing dealership locations. Plus, the group wanted to expand its reach into new markets. “We didn’t have new car franchises in the markets we wanted to expand into,” said John Isaacson, CEO of Lee Auto Malls. “The only way for us to increase our buy here pay here sales volume was to open new locations, and the only way for us to open the new locations was to open them as standalone used car stores.” So in 1999, the group began opening standalone locations to handle both retail used vehicle sales and buy here pay here. Today, there are nine LeeCars Used Car Superstore/Lee Credit Express locations in Auburn, Augusta, Lewiston, Newport, Norway, Saco, Topsham, Westbrook and Windham, Maine.

In November 2009, the auto group was presented with the opportunity to expand its BHPH footprint in the state through the acquisition of the Credit Now! Auto Company, a well-established BHPH dealership with eight locations and part of the Linnehan Family of Businesses. “John [Linnehan] wanted a way of retiring from the used car business to pursue other endeavors, and he … literally just called us out of the blue one day and asked if we’d be interested,” recalled Isaacson. “We spent some time together and were able to strike a deal to both buy his finance company [Atlantic Acceptance] and the notes and take over his eight sales locations.” They also retained the Credit Now employees.

Lee Credit Express Norway
As the largest volume dealer in the state of Maine, Lee Auto Malls has 17 locations spread across the state, nine of which house BHPH operations. The BHPH operations sell a total of 375 to 400 vehicles per month, half of which are financed through the company's two related finance companies.

Rather than overhaul the Credit Now stores and rebrand them as Credit Express locations, Isaacson said they took the best parts of both operations and used them to their mutual benefit. “They were very, very successful stores [already],” he stated. “All we tried to do was take the best things that they were doing and introduce those to our stores, and take the best things that we were doing and introduce those to the [Credit Now stores], and that has worked very well for us.”

The operations are run essentially as individual companies with common ownership. “We still have two finance companies and two sales operations,” said Isaacson. “They’re in different parts of the state; that makes it easier.” The related finance companies, Maine Auto Credit and Atlantic Acceptance, each have central offices that handle originations and collections outside the dealerships.

A few changes were made in each of the sales operations. The Credit Now stores were moved over to the same computer system and software in use at Credit Express (Auto Master and Reynolds & Reynolds), and Isaacson said they put in ACH and EFT capabilities to automate the payment process at Credit Now. He said they were also able to introduce several third-party prime and subprime finance sources into the Credit Now stores, giving them financing options for used car customers in virtually any credit range. “Credit Express had access to a lot more subprime banks and prime banks than Credit Now did because Credit Express was … associated with new car stores, so we introduced several additional banks for indirect lending and more options for our customers.”

He also said that after acquiring the Credit Now stores, “We expanded a bit on the makes and models that we offered for vehicles.” They added more trucks and SUVs, a segment that performs fairly well in the region. “Maine has a lot of snow [and] a lot of people into hunting, fishing, off-roading and towing things, so we sell a decent number of four-wheel-drive trucks and SUVs.” That also meant dealing with some higher ACVs, but Isaacson said, “[We] reached out to a market that we weren’t reaching out to as heavily in the past.” Typical inventory for BHPH at Lee Credit Express and Lee Credit Now is around five years old and about 75,000 miles, Isaacson said, “but it could be anything from a small car to … a full-size pickup truck.”

In terms of marketing and advertising, Isaacson said they’ve done a little of everything to drive BHPH traffic—direct mail, TV, radio, print and social media. He added they spend a lot of money on TV commercials, which push customers to one of the group’s websites to complete an online credit application. The ads that run in southern Maine push LeeCredit.com, and the ads that run in northern Maine feature CreditNow.com. They currently do a small amount of advertising in print and on the radio, “but the theme of all of it is, ‘Go to our website and that’s where you start the process.’ We don’t really push an 800 number. We don’t push ‘come in and look.’”

Lee Credit Express has always been ahead of the curve when it comes to utilizing the Internet in BHPH. “We started directing people to our website in our advertising a long time ago,” he said, estimating that ads began promoting the site about 14 years ago. “We were the first auto dealer in Maine to have a website.” Isaacson said the vast majority of their business comes through the websites for Lee Credit Express and Lee Credit Now.

Lee Credit Express and Lee Credit Now each have a centralized BDC to handle all phone and Internet leads for their respective stores, BHPH leads are handled by different people than those who field the retail leads. “It’s a different type of lead and we have different people handling them,” said Isaacson.

An important practice Lee Credit Express adopted from the Credit Now stores is selling a vehicle service contract to BHPH customers. Isaacson said Credit Now had already been successfully selling them for some time. “They had a long track record [and] we were able to see the results.” The VSC is a 24-month/24,000-mile plan which he described as “power train-plus … It’s a comprehensive but not bumper-to-bumper plan.” In a typical month, more than 85 percent of BHPH customers at Lee Credit Express and Lee Credit Now purchase the service contract. “We make it very affordable,” he said. “When [a customer is] buying an older, higher-mileage car … especially someone who doesn’t have a lot of disposable income, it certainly makes sense.”

Lee Credit Express and Lee Credit Now each have a department set up specifically for helping customers through the repair process, regardless of whether or not they purchased a service contract. “The last thing we want is to have a customer with a broken-down car and no place to turn or nobody who’s on their side helping them get it repaired properly, inexpensively [and] quickly so they can get the car running [and] get back to work,” he said. “If they have an issue, they have someplace to call. Folks who work for us help them navigate the repair process [and] make arrangements with one of our shops or with a shop in their area.” Costs for repairs not covered by the service contract or for customers who did not purchase a service contract are evaluated on a case-by-case basis to determine the best way to help each customer pay for the needed repairs.

Isaacson said their collectors work to help the customers as well, many of whom are unaware of the resources available to help them when they encounter financial difficulties—resources like debt counseling or financial assistance with winter heating bills, for example. “Our collectors many times are sort of counselors, helping people through life crises, helping them get whatever assistance is available from local, state [or] federal agencies for whatever their particular issue may be, and helping them, obviously, make their payments … It’s very collaborative,” he stated.

John Isaacson"We started directing people to our website in our advertising a long time ago ... We were the first auto dealer in Maine to have a website."

- John Isaacson, CEO, Lee Auto Malls

The dealerships don’t employ any devices like starter interrupts or GPS locators to assist in collections and repossessions. Isaacson said, “It’s not in our style of doing business. I wouldn’t like it if someone put one of those on my car, so I wouldn’t ask to put one on somebody else’s.” Additionally, he didn’t believe such devices made an appreciable difference in a dealership’s collection numbers. “What we’ve found is if you look at a list of dealers in a 20 group … we’ve never been able to really tell which group had some sort of interrupt system or car locator and which group didn’t.”

To some degree, it’s about establishing trust between the customer and the dealership. “We want to take care of our customers … If they get into trouble, we want to be the people they call, and in almost every case, that’s what happens,” said Isaacson. “Part of it’s just actually treating people the way you’d like to be treated. People appreciate that.”

Creating that kind of trust with customers while helping them establish or re-establish their credit, coupled with the wide range of available finance options, means the auto group can truly cultivate customers for life, potentially walking them from no credit or poor credit to prime credit. Today’s BHPH customer at Lee Credit Express could be tomorrow’s new-car buyer at one of Lee Auto Malls’ franchise stores. “One of our goals is to … help them step up perhaps from buy here pay here to subprime or from subprime to prime,” he said, “so the next time around we’ll sell them a car and be able to finance it for them through Honda or Toyota.” He added, “It doesn’t happen for every customer, certainly, but that’s one of our goals.”

The related finance companies’ underwriting guidelines have changed somewhat in the last couple of years; like many other finance sources, they’ve tightened up a bit. “We’re not approving today people we might have approved five years ago,” said Isaacson. “Before, we might have … given [stability] higher weight than income,” he said, meaning that someone with very low income could still get approved if they had good work and residence histories. Today, that same individual would not make the cut. “Over time we have put more and more emphasis on income, on ability to pay, and less emphasis on stability.” With the increase in wholesale prices of used vehicles, Isaacson said they have also had to do a some adjusting by putting together deals with “a slightly longer term, higher down payment and slightly lower gross—everything has to give a little bit.”

What little is lost in gross can be made up in volume. The two BHPH operations combined sell between 375 and 400 vehicles per month, about half of which, according to Isaacson, are financed through one of the two related finance companies. So, is one of them outselling the other? “They’re almost even, and that is good because they compete,” he said. “They see each other’s numbers every day and nobody likes to finish second, so that helps push the volume.”

Vol. 8, Issue 10