Wake up, Buy Here, Pay Here people.
It's a beautiful day.
Go grab yourself another cup of Joe and say hello to Jim and Michelle Rhodes on the Buy Here, Pay Here morning show.
Take it away, you two.
Hey, every morning.
Good.
Good morning.
We're like all in our flannel.
It's a flannel kind of day.
It's Monday.
Yay.
Over the weekend.
Great weekend for us.
Lots of brainstorming except that Sunday we got up early and shoveled a lot of snow that snow the day before and Jim like
we were just cleaning up.
I mean, we were done with all the heavy work and he's just like, you know how it is when you're middle-aged and you sneeze or move your eye over here and it goes kink in your back.
So, um, he was, he was down most of the day yesterday, just
just chilling and feeling a lot better.
Yeah.
Yeah.
But yeah, so it's a crazy thing.
I've done it before.
Been to pick up a, I remember we're doing it one time on a client visit and just, I remember you telling me about that bag and just, wow.
It was like barely could stand straight up after that.
Yeah.
And, uh,
This one was similar, but thankfully I'm feeling a lot better today.
That's good.
No more snow in the forecast, at least until after we're gone.
Yeah, we head to Ohio on Tuesday to go visit with a client.
So haven't quite decided if we're going to be doing a recorded broadcast for Wednesday or if we'll be doing it live and just doing it from a hotel.
I think I decided.
Oh, you did?
I think it's pre-recorded.
Okay, it's pre-recorded.
And then on Friday, we are going to be broadcasting live from Ohio.
So yeah, looking forward to that.
You have the topics for the week.
for this current week that we're in yeah today we're talking side notes on uh wednesday we're talking we're referring to my um blog post about um the
know what it looks like to be involved in white hat way down the line it's like uh imagine the day is the title of the blog post so that'll be uh wednesday and there's lots of stuff to tie into that so so i think it'll be uh important we don't want to announce yet that we have uh
Something on the calendar for the 24th, which waiting to confirm one more guest.
And so that will be a week from Wednesday.
Excited to have that.
It's going to be a fun White Hat Wednesday next week.
And then the following Wednesday, the 31st, we've also got something teed up.
We've got something really special for that one, too.
And it's the one for this, our next week, not this week on Wednesday, but next week on Wednesday on the 24th.
We have, um, we have a couple of guests that would be coming and then the following week we have a few guests as well.
So, um, some great stuff that, that we're looking forward to sharing with you all.
So today.
Yeah.
Today I wanted to talk about, um, side notes and, uh,
This is something that, you know, we completed a study with a client not long ago, and I got to the place where I could get something meaningful.
This is a client who's contemplating, you know, should I start doing reinsurance?
He's looking at service contracts and warranty and all this stuff.
And so you just got to start thinking about a track around side notes.
And that's what a lot of dealers do.
I don't have a good feel for how many dealers out there
are active in reinsurance.
My best guess is 20, 25%, maybe at most, or buy here, pay here dealers are doing reinsurance.
So that just means how do you handle repairs or do you handle repairs?
You know, what do you do for post-sale support?
And in really breaking down, you know, with this particular dealer, we did an analysis and I,
Thought I'd be able to show it today, but I'm not finding the document.
So I just created it this morning, but it's apparently a different profile or whatever.
But yeah, I think when we talk about side notes, it's really just a matter of, you know, how do we handle repairs on a vehicle after delivery?
Because, you know, we know you talk to any, anybody who's been around the buy here, pay your business, ask somebody at the car auction, you know, they'll pretty much all say if the car's not running, the customer won't pay.
Okay.
That's pretty consistent.
I mean, regardless of whether or not you as is or have free insurance or just do repairs through side notes completely or whatever that I think that that's a pretty consistent
pretty strict, a consensus.
Yeah.
And there are exceptions, but certainly the, the, the general, the predominant thinking is that the customer's not going to pay when the car's not running, which means if I'm a buy here, pay here dealer, it's pretty new to the business.
If I say to a customer, well, it's as is it's your responsibility.
So you're going to have to pay for those repairs and customers facing an expensive repair.
I'm not going to be surprised if they don't have the money.
So does that mean I'm just going to repossess because the customer's not going to pay?
They can't afford the repairs.
They're just going to leave it parked on the roadside or in their driveway.
And I'm going to end up with lots and lots of repos.
And that's a real thing that I see on social.
It just seems like that's, yeah, that's something that happens frequently.
I mean, mechanical is a large contributor to non-payment.
Well, to charge-offs.
I mean, just if you looked at what contributed to the charge-off experience, then mechanical is a large contributor in those losses.
So we want to look at solutions.
And I think...
When I think about side notes, we've got to be careful here.
This is something that verify in your state that side notes are permitted.
In most states where they're permitted, you're not allowed to charge interest on those side notes.
So in most DMS systems, the way a side note would work, you would go to the customer's account, you would add a side note, you would choose the amount that you're financing.
And you would create a kind of a parallel side note.
And typically you can set a new payment structure.
You can make it monthly or biweekly or whatever you might choose for the customer to repay, you know, that side note.
So it's simply a secondary loan.
right but we we got to be careful because not all of us are are qualified in our states to make those kind of consumer loans so this is the part that i'm saying just make sure you're properly licensed to do that and uh as i said in the comments for the show most dms systems will accommodate a side note so now the question becomes how how do i make a decision whether or not to do it well there would be one thing
To first of all, verify that the customer is in agreement.
I find that dealers, sometimes they don't have a good process and they don't have a degree of accountability.
And so sometimes the repairs start with no real plan for how that's going to be resolved.
And so imagine if you're the customer, Michelle, and somebody says,
know your car goes in the shop and says good news mr customer we fixed the car and we made the repairs and now you owe us two thousand dollars sign here you know it's like you didn't you know it's your money as a consumer it's your responsibility to pay for it so i just think part of this is just about being clear you know about what is what what are the steps what's the process for extending this loan
And then I also recommend that dealers have a clear boundary about that to make sure that they have a limit.
I would always suggest a loan limit.
Just make a policy, a practice that we don't loan any more than X, you know, whatever that policy can look like.
That kind of ties into a comment that we got from a Facebook user.
It says, I just had a major blow up over a possible loan.
over a possibly confused customer when it came to their side note.
I guess that's what we get for trying to help someone.
I think a better alternative when the dollar amount is fairly large is to refinance the entire deal
which until recently I didn't know was even a possibility.
So what are your thoughts on that?
You got to be careful because this is getting into state specific stuff here.
You got to make sure that because not every state is going to what you're talking about.
There's a contract modification sometimes called a rewrite.
There are different names for that, but you're going to go in and rework the terms of the contract.
And while I might agree,
If my DMS accommodates it and my state's okay with it, I would like the idea of refinancing the thing so it's all in one note.
If it's a larger amount, we can put it all in one note.
Customer's got one payment to think about, and that's okay.
But when you're adjusting principal on a customer's contract, that's a pretty serious thing.
So just make sure you're covered with your state.
to be able to do that.
And your DMS provider can probably provide some insight on that as well.
Well, the DMS should provide you some information about the state.
Okay.
The question I was going to ask is, would the DMS just let you do it regardless of whether or not your state allows you to?
I can't speak for every DMS.
Most of the ones that I've been around that are more sophisticated, they're going to typically flag you or stop you if you're not permitted to do it.
But think about it, your DMS is not, they're not out there to enforce these practices.
They'll try to catch it and keep you, for example, from charging interest if you're not allowed to charge interest in your state or whatever.
But again, these are things we, this is another example of why you want to be a member of your state association because the legal resources through your state association would be the people to ask some of these questions about what's permitted.
But let's just, if we operate on the idea that it is permitted in your state,
Then let's think about, okay, what is, what makes sense for me to do, you know, as a dealer.
So let's just, let's, let's talk first about a dollar limit, you know, whatever that's going to be.
And, you know, this is challenging because if, if you finance a customer, you know, last month or a couple months ago, and now they've got an engine down and.
the cost of the engine is $3,500 to get a new block and get it, you know, to get it installed.
Well, if my loan limit that I set as a policy was $2,000, what am I to do?
Yeah.
You know, what am I to do?
So you could do this.
You could say, well, Mr. Customer, unfortunately, the repairs on that particular car are going to run $3,500, it looks like, is the best estimate we get.
But we're only able to provide you with financing up to $2,000.
Thankfully, your account's current.
I can help you with a loan, but our loan limit is $2,000.
So you can cover the other $1,500.
out of your pocket if you've got it and you want to do that.
Or we could talk about trading you into another car.
So that's the part that I would say.
We see dealers sometimes just like, I have to fix the car, I have to fix the customer's car.
And I think when there's a financial consideration there, I think sometimes we need to be careful to make sure that we don't sink the money into the car.
like it's a have to, I think what we, we have some options there and I think we ought to explore those.
And to me that ought to be around a financial limit.
Okay.
Just a practice.
We have a practice that we don't go above this.
And so, so what do you do?
Well, one, maybe stay away from the stuff that's going to require $3,500 motor or whatever the case is going to be, or have other ways to solve, solve that problem.
And you may trade it in from the customer, put them in a different car, and then you may or may not put an engine in that, that particular collateral later.
Uh, but it's like, that's, that's where I would say we got to kind of watch our limits, but let's back up and talk about what if, what do we do if we, if we do nothing, you know, Michelle, you're my customer.
Uh, you tell me that you're having problems, your car's overheating and, uh, and you got it to a shop and they told you it needs a head gasket and it's going to be, you
You know, $1,000 or the heads are warped.
It's going to be a $1,500 repair.
I'm picking numbers.
I'm out of touch on these numbers these days.
But whatever it's going to cost to get that repaired for you and you don't have the cash.
Well, if I do nothing, what do we think is going to be the outcome?
I will just let you repossess the car or yeah, either voluntary or whatever.
Cause I need a car and, and, and, and, you know, I think part of it depends on when that happens.
Part of it depends on the kind of relationship that I have with you.
I mean, I think that is a thread that we need to be really aware of is being able to develop a relationship with our customers so you can have the conversation because we've seen it and I've watched it through social and through our clients that if a customer doesn't know that you can help, they will go out and get another car and let that one repossess because they don't know that there's an option.
Right.
Yeah.
So this is among the things that comes up is like, how do we, so let's walk through this example though.
You said you're, you don't have the 1500.
So if, if I'm just leaving you to your own devices, it's as is, I'm not paying for any repairs.
I'm not helping with any repairs.
Then your choice is I don't have the 1500.
So I either turn back the car back over to you or leave it where it is.
Cause they've already, maybe it's a shot.
Cause I got to get a car.
So it's kind of like, well, yeah,
And I'm obviously, if I can't pay for it and you're not willing to help, then you're not someone I'm going to ask about, can I get into another car?
You're going to go somewhere else.
So, well, let's go a little further though.
Let's look at the dealer side of that.
If you choose to walk away from the car, you decide a voluntary repo because you don't have it.
And for
800 down, you can just go get another car instead.
You'll finance with another dealer.
So where does that leave me as a dealer?
I did nothing to help.
Now I can go pay for the diagnosis at the repair shop and get the collateral back out and process it as a repo or whatever.
But now what's the value of the collateral that I chose not to help you with repairs?
What's the value of the car that has a blown head or bad head gasket and cracked heads?
I don't know, but it's an interesting thing that just ran through my mind is that to look at the value of the car and the value of the relationship.
Right.
Because if you have a relationship with someone...
And you, you know, that, that there is like head gasket needs to be done and, you know, you figure out what, then you might, you might be able to keep a, keep a customer for a lot longer.
Just, I mean, there's gotta be ways that you can do that.
Even if you are as is no, no repairs, ways to be able to help or encourage or, you know, give ideas, support, whatever.
I mean, there's, there's, I think there's ways of doing both.
Well, but if you don't have the ability to do a side note or some of these other solutions that people are talking about, if you don't have the means to do it or you're unwilling, your policy is just everything's as is.
I'm not helping financially with any repairs.
That's on you.
You sign an as is.
Then if we don't have solutions for that, then I think what we can start to see the mathematics behind, if I do nothing in the scenario that you described, I'm going to get the collateral back.
It's going to be worth a lot less with a blown head gasket.
It's not running.
That's true.
But I mean, if you do have a decent relationship and the ability to say, you know what, I'm not going to help you repair it.
But if you want to bring in $800, we can get you into a new car.
And then you take the collateral and they continue paying because they've been a good payer.
I guess the part I'm really trying to stay focused on is regardless of the relationship that you and I have dealer and customer,
if you don't have the money you don't have the money yeah like our relationship may be great but if you don't have the 1500 to cover this legitimate repair which you've got to have it you can't drive it any further with it like that so it's the repairs have got to be done so we've got to move quickly
Because I know you don't want to make a payment.
And one of the things we just worked through with a dealer, we helped them write a set of rules to be able to notify their customers.
In some case, it was new policy.
In some case, it was reaffirming the policy that they've had in place for a long time.
They just haven't done a real good job of enforcing it.
So we helped write some language that they can email to all their customers and say, as of February 1st, this will be our new practice and this is how we'll handle repair.
Because, you know, the dealers can get into this place where they write a lot of checks for goodwill.
Like some dealers, depending on how long it's been since delivery.
This has kind of been a theme for a little bit because we've been talking about this, that, you know, that there's...
So there's, yeah, there's, there's a lot of that, that why I see when I social again and our clients that, that they just go ahead and do it.
Yeah.
And I, you know, I look, dealers have their own practices and some people come, as we know, from customer service background, especially if they come from used retail or franchise car business, then the, you know, the idea is to make the customer happy, make the customer happy.
Well, for
For dealer principals, that usually means writing a check, getting a checkbook and buying a motor, buying a transmission, whatever.
And so we're just simply advocating and everybody's going to have their own business approach.
We're simply advocating for have a clear set of bumpers, like, and stick to it, like hold the customer accountable to what is their responsibility and, and, and try to limit those goodwill repairs.
Like we know that that's possible.
In my dealership, you know, years ago, I had a dealership for seven years.
And if you add the two and a half years or so that I managed back in the 90s, it would include those years too.
I never paid for any repairs to a customer's car that was outside.
I never had any goodwill repairs.
Call it what you want, goodwill repairs.
Zero.
But you helped, right?
I helped.
There was tons of ways we helped financially.
So this would be side notes.
It would be any number of ways that we would have provided help to the customer.
It might have involved trading them into another car and then I would eat the other that they wouldn't know about.
I didn't necessarily want them to know what was going to happen with the trading car, but I would trade them.
And so we would do that in the interest of getting them back on the road typically, getting them back on the road quickly.
Because the foundational question is how do we keep them in a car that's running and on the road?
Yeah.
How do we remove, you know, help with those barriers that would keep them from that?
So I think the key word here is help and support.
We want to be able to have solutions, be able to provide support to a customer in those situations and keep
I think the piece that I'm always trying to help dealers to implement is the
Why don't we hold the customer accountable to doing their part?
When we're asking them to do something reasonable, fulfill their part of the understanding, then that's the part that I feel like is overlooked a lot.
We just don't seem to hold the customers accountable to their responsibility.
And look, this is part of why I think you have to have a limit.
If you could make a customer a $1,500 loan, like in the case of this head gasket repair we're talking about,
I could make that loan.
If I put a $3,500 motor in the car and I made that loan to the customer,
Will they be able to repay all that?
Will they be able to pay the amount that they're already paying on the car plus the $3,500?
They'll agree to it.
They'll sign the thing and say, I'm going to pay $50 a month.
But will they ever really be able to repay the loan?
And if so, aren't we just kidding ourselves?
I mean, are we... So this is part of why I think you have to have a limit.
There has to be a limit that makes financial sense for the customer and their ability to repay and willingness to repay.
And then...
But I just don't think dealers have to absorb as much as they often do in terms of goodwill.
They just choose in the interest of making the customer happy.
And while I also expect to make customers happy, and when I talked about that approach with my own dealerships, we didn't have unhappy customers.
Now, they might be unhappy for about...
an hour you know because they they're disappointed and frustrated and just like anybody would be when their car's not running and now it's a financial setback that they weren't prepared for so yeah that's upsetting and so but i'm saying the customer ultimately might be upset and i might need to call them back in a couple of hours and talk through it again and say you know we're happy to help but this is what's going to happen and so i just say that the key is
We find ways to get the customer back on the road.
We know that's got to happen.
I want the customer to do their part.
I would certainly be advising any of our clients.
Is the customer's account current?
Like if you needed help with your $1,500 head gasket repair, I would look at the account.
Is the account current?
Okay.
Well, the customer's doing their part to meet the payments.
That's one of the things I asked for you to do.
You reached out to me and communicated with me.
The other thing I asked you to do.
So in those scenarios, I'm going to be certainly coming forward and doing the
everything sensible to
And within the bumpers to find solutions, get that repaired, save you as a customer.
Again, expecting you're going to be my customer for 10, 20, 30 years.
So whatever's going on here, we got to get past.
And sometimes that's a loan.
Sometimes that's a trade, you know, whatever the case may be.
But I'm just trying to act quickly.
So that's what we're really driving at here is.
And so let's talk through the other ways that you could resolve this.
You know, if you had to reinsurance, you could do your own reinsured warranty.
you could do a service contract, an optional service contract.
But in those cases, customer has to opt in on that.
They have to buy that and finance it or pay cash for it, which I never hear about.
But you'll finance it typically if you're doing a service contract.
And so the idea here is really there's multiple elements.
And when I talk to the reinsurance folks, often they talk about, and they're absolutely right, there are tremendous tax benefits associated with dealers choosing to invest through a service contract reinsurance program.
They're absolutely right.
I'm simply saying before we even talk about all those pieces, can we talk about this scenario where a customer's car has broken down, their account's current, they're doing their part, we would like to be able to get them back on the road quickly.
So by pooling all of those things through a reinsurance program, then that can make a lot of sense.
It's just that we have some listeners today, I'm sure, that are new enough to the business that they can't really step into reinsurance.
Most reinsurance companies are going to look for the dealer to have some
track record some products more than others but they're going to have to have some history typically before they can even step in and start doing reinsurance so it's just that they're going to have dealers here that are newer that don't know how to really resolve that and I'm simply saying let's have a practice let's put it in writing and
It can be internal.
We can have our own internal stuff, but I'm just simply saying create some boundaries and be prepared to help.
But really avoid goodwill.
Avoid the idea of just writing a check and making the customer happy, especially if it's going to compromise the other documents that you put in writing.
Yeah.
Yes.
Especially, yeah.
Yes.
It's across the board with all relationships is be consistent and honor your word.
It's like people know that you're going to say what you, or you're going to do what you're going to say.
I have a question and then I have something that you just made me think of.
Rich Pratt, will Frazier refinance added costs?
I can't say.
Yeah, you're going to have to check with your DMS.
I'm not familiar enough with how these individual DMSs handle it.
Most will do that.
It just, I can't, there's a difference between adding a side note as a separate sort of parallel loan on the customer's account or, yeah, refinancing, modifying, rewriting.
Check with your DMS and also your state association to find out about that.
But, you know, I was just kind of thinking about one of the elements of a conversation about keeping people on the road is like, yeah, I'm always doing this goodwill and it is just it's costing a lot.
And so when you think about, hey, if I'm going to do side notes, I mean, that's going to cost a lot.
Well, it's like you're already putting the money in.
You stop the flow going out to goodwill and
And you've got this pool that you're already working around for the most part, what you're putting out all the time.
And so it's like the money's getting spent.
Why not try to recoup?
Part of it.
I mean, imagine if you would, all of the money that you put out every month, um, goodwill and that you were able to get a half or three quarters of that back every month.
Um, yeah, you know that you're, you're recouping the money, um, because people are paying back as a side note.
And so you're,
know they usually don't pay back that quickly but i mean it's like over you know all these different accounts and stuff and you're putting money out and so it's just it's money that's coming back in um into that fund or whatever and i again i couldn't pull up the numbers but i remember them from this morning and really the whole purpose of showing anything was to invite dealers to go back and do their own studies for dealers that have been in business for some time have been making side notes
We did a study with a client who's been in business for, they've been in business for many years, but they've been on the same software for more than five years.
So we did a five-year study on their history with side notes.
And it showed that they had actually collected about 73% of the principal dollars that they loaned out there.
For the side notes.
Yeah.
And so that's higher than I think most dealers are going to experience between charge-offs and just simple defaults.
Sometimes the side note runs longer than the original note.
And so customers still are paying, but paying kind of slowly.
And there's also, by the way, some question on these side note things is about security.
Like what kind of, can I, do I have any kind of security?
You get into stuff like cross-collateral clause, which you'd want to talk to your attorney about, but it's like, if I loan a customer $1,500 and they don't pay it, what action can I take?
Can I repossess the car?
This is getting into some tricky stuff, so it's important to know.
But I think the main takeaway that I've asked dealers to think about is,
What is the value of the collateral if you do nothing?
It's your collateral, Mr. Dealer.
We did an episode way back about is it the customer's car or is it my car?
Remember that?
And dealers were like split.
It's like it's my car until it's paid off or it's the customer's car.
So it's interesting to me.
But I think regardless of where you land on that one, I'm simply saying if I loan the money to you and unless you –
have an accident, wrap the car around a telephone pole, in which case that's a whole nother topic for a whole nother show.
Or you're going to skip the country and I'm never going to see another payment again.
But unless those two scenarios happen, all I've really done is loan you money that improved the collateral.
That is my security on the loan.
So I've improved the value of my own collateral and I've made you happy to get you back on the road because you like the car just fine.
So,
I get the car back on the road, and I've helped my own collateral.
So if something happens, you lose a job, and I repossess the car in six months, at least the car has got a repaired head.
It's running right.
It's not overheating and all those kind of things.
So the value of the collateral is substantially higher because I helped.
with those loans.
So there's the unselfish part of help your customer.
There's the selfish part of help yourself and the value of your own collateral so that you can have ways to get those things solved quickly.
So this is why we just think.
And to help yourself about your budget too, a lot, because it is, it, that is a budget issue.
um right yeah so it's just um you know it's something for dealers to think about i want them to be aware that you know there there are solutions depending on your state again and what you can do there but just know that the and often the other thing that happens here is dealer if i loaned you fifteen hundred dollars and you said to me i i can't afford any extra payment i i i need to i can repay it at the end of my note
My answer to that as a dealer was always, no, I wouldn't, I won't do that.
If you can't make some sort of payment toward it, then I'm not prepared to, because so my, my approach would be just to walk through my own scenario and what I would be advising other dealers to do is if I,
I we got the estimate and it's fifteen hundred dollars.
OK, Michelle, how much of the fifteen hundred can you cover?
You know, it's your financial responsibility.
You're not under warranty.
So how much can you cover?
Five hundred.
OK, so if if I were able to able to help you with a loan of a thousand dollars on that repair, how quickly could you repay it?
Well, what if, what if I were to come and say, I don't, I mean, it's, I don't have anything.
Yeah.
Which, you know, is a, there, there's a lot of people that even if they do are going to say that.
Well, we make a lot of loans out there and buy here payer that are right up against the cap on a print payment to income ratio.
So, you know, any additional 30, $50 a month is going to be a problem.
But I think this goes back to really an underwriting question.
So here we are talking about side notes and we're all the way back to underwriting.
Because if I'm underwriting customers whose income is razor thin, like they couldn't afford to help themselves with $100 repair, I can loan them $1,000 in this example.
It's going to happen again.
What's going to happen again?
And so I see this a lot with fixed income.
When customers got fixed income, will they be able to afford any repairs?
If not, who's going to pay for them?
That's like a whole other conversation about what are we doing about payment to income ratio?
Are we allowing them the space to be able to fix the car if they need to?
So back to our scenario, let's say I'm considering a loan for you.
You've got a 500, which is wonderful.
um i'm considering a loan how soon could you repay this thousand dollar loan because my decision my yes or no decision and we need to hurry because the car needs what i mean like like what if i said i need six months or you know it's if i if i broke that out that would be you know um less about 200 whatever dollars a month that i would have to pay in addition it's like okay i can do that um
then that's fine.
I mean, we would, we'd write up a loan and I would sure I would do that.
It's, it's what you're going to see what dealers are hearing more often as customers.
I can't afford any of the repairs.
It's not that they're not willing to sign a loan.
They just don't have the means to repay a payment.
Can you do something?
And this is one of the things, you know, we've talked about with doing the tax payments too, is that, you know, if, if, if you can make an extra a hundred dollars a month until you get your tax return and
And then when that comes in, we can pay off the balance of the side note.
Then that would be, you know, it's like, okay, so can you, can you do $50 a month?
Can you do a hundred dollars more a month?
And then we'll take care of that.
I'll go more extreme than that to just to prove the point.
If the customer would commit to $5 a month,
until the tax refund comes and then they're doing something and then they go back to five dollars a month i'm just saying i i want to see dealers get the customer to get committed to repaying it to me the the significant part of this is instead of goodwill repairs which are really unnecessary and even a little bit dangerous legally when you step into that
Why not just get the customer to agree to repay it, even if it takes a really long time?
Like I say, so I'm being exaggerated and being extreme here.
$5 a month, then you pay from your tax refund seat when the tax refund comes.
And that's a relief for the customer.
And I'll bet you, in most scenarios, the customer will say, oh, what a relief.
I was concerned I was going to have to cough up $150, $200 a month.
That's going to be difficult right now.
But yeah, if you can let me repay it for my tax refund, absolutely.
Let's get the car repaired.
I'll sign the loan.
Well, and there are, you know, you have the ability.
That's one nice thing about the tax refund type things.
You have the ability to run it all yourself and to, you know, do promises to pay and all of that.
There are companies out there that make it very easy for you, that you help with filing the taxes.
The money comes to you directly.
And then you just give the balance of the return to the customer after your square.
Yeah.
But I guess my point here is that we have to have...
We have to have a set of boundaries.
We're definitely going to suffer if we don't create a good set of ground rules here and stick to it.
And then, like I said, I just want to see the customers take responsibility for what is theirs.
And, of course, there will come some financial scenarios that just don't make sense for the dealer or the consumer, and you've got to look at other options then.
But otherwise, I would say let's stay within a certain set of bumpers.
Let's have a clear-cut set of rules around this.
And, you know, we've talked about this in our white hat way of coaching and kind of this idea that we want to take care of the customers.
We want to see them be happy, be there for a long time.
There's nothing in that coaching that says we're going to do everything.
The customer is going to do nothing.
That's not the approach.
No, it's about being helpful to help them help themselves.
Find solutions.
They've got to help themselves.
That's right.
So we're happy to help people who are willing to help themselves and do their part.
if they're not willing to do their part then we might as well end the relationship sooner than yes so that's kind of the approach there's one last uh comment that i just wanted you to to address uh be careful about refinancing it back in some states have different cap rates for loans versus side notes and that will probably cause problems if you roll it in you know first off jim mentioned that a lot of side notes
that there's a lot of states that you can't, and you can't do any kind of interest on a side note.
And I would add to what the comment says here is that in some states, you're not allowed to modify the contract.
So it's tricky stuff.
I mean, you're modifying the original retail installment contract.
Just think about what that looks like to regulators.
You need to make sure you're
you're uh protected and covered in that scenario so everything in writing everything oh yeah um yeah just frontwards and backwards that's the other thing too is about the customer needs to sign this stuff if i'm going to loan michelle this thousand dollars for that head gasket repair out i need a signature before repair start we gotta have a firm understanding so i can be docusign anybody can sign something it can be docusign it's and those of you have like
videoed closings, you could add something for a side note that you got to come in.
You got to close the, you know, to sign the paperwork here so that you... I don't want to be that open.
But you got to put it in writing.
You just got to put things in writing.
And I'm saying, regardless of what system, you can use DocuSign.
There's other ways that customers can do this.
But I'm simply saying...
As from a process standpoint, we got to at least slow down and make sure that we're in agreement.
If we're extending a loan to somebody, let's make sure we're in agreement on the loan before the repairs start.
And now we can get busy and get through loan authorized and get the repairs underway and
Get them back on the road.
Yeah, get them back on the road as quickly as possible.
So make that stuff happen fast.
Love it.
Great conversation.
I really appreciate it.
Appreciate all the comments.
Mr. Melendez, I'll have Jim give you a call in just a little bit.
Have a great Monday, guys.
We really appreciate you tuning in.
And we will see you on Wednesday.
What's the topic again?
That's going to be that blog post.
That's right.
Imagine the day.
So we'll see you guys all on Wednesday.
Thanks again so much for joining us.
Have a great week.
