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. Oh my goodness. Happy Friday. Jim's like, I got to go get something when we were running the thing and I was... Okay. It's really iffy. I'm prepared to start on my own. This is really iffy on battery power on my extra device. So that's why I went to grab my power cord. It's all kind of bundled up in some other power cord. Well, we should probably get another power cord that can be in here just like the other stuff. Yeah. Or we're going to have to pause and I'll step away and go grab a power cord. And I'll entertain everyone for a minute. I got this extra device to show a spreadsheet today. Okay. uh yeah yeah uh friday happy friday um we're done with all of our v-eight meetings for the month and last night you had a newcomer group and then had a dealer that is going to be he's one of Yeah, he's going to be helping moderate. Yeah. And really, really great meeting with a newcomers. And you're going based on what I shared with you. So yeah, yes, I am. So I always check in with Jim when he's done with one of the meetings, like, how did it go? And last night, he was like, that was awesome. Yeah. So the moderator trainee was the first time to attend. It was really, really great. I was glad to have him there. And it was just an indication of how, you know, we're going to have a chance to really expand VA through adding these. Really great. You know, once we have an agreement in place and stuff, we'll be making an announcement about who's coming. coming in to join us and, but just really thrilled. And Jim filled me in on, on his story and, and it's going to make a really great dealer moderator. Absolutely. Yeah. And, and then a couple of quick announcements. We've got LHPH is this coming week. Is it really? Yeah. I think it's Wednesday through Friday, the second to the fourth. So that should be, let's see. The first is Tuesday. Yeah. Wednesday through Friday. Yeah. And then you've got Florida, IADA, if they're not washed out down there, that's October fifth. You know, hello, all you Florida people. It seems like every year is that the dates for the Florida conference are just get like iffy around hurricane season so you know for what it's worth maybe do it in the spring or something I don't know but it's like and I know in orlando it's like it's the center and it's gonna be just fine they don't they don't listen to them I know I know well I mean some of them might I don't know But yeah, best of wishes and for safety and all of that for everyone. It looks like it's going to hit not just the panhandle of Florida really hard, but we have friends that live in the Clearwater area where we moved from and they were sending videos and they were still expecting the surge and You know, it was up over the banks and everything. We lived in the same building as them, like right on the intercoastal. And it's getting pretty gnarly, but not like a hurricane eye. And so Tallahassee, wasn't it Tallahassee, Pensacola? Where is it? That it's going to get... That's where it's going to hit hard. What do they call that? The, the wall, the seawall. So you could see in their case, the waves were smashing up over the seawall and that's on the intercoastal. That's on the, they're protected by the outer beach, right? So, so you got pretty substantial amount of water moving. So, and then, I mean, everyone is just going to get hit all the way up through, I mean, so many interior states. And so best of, you know, our, our, our thoughts and prayers are going out to everybody that's out there and that's dealing with this kind of mother nature stuff. And that's it from the weather desk back. Oh, really? Oh, okay. Sorry. Yeah. So, uh, So yesterday or today's topic is one of the clients that we have that we've had for quite a while. Jim was working with them and, and after he was done with the meeting, he came up with this tool to, I mean, it's. I created, I created some calculations inside the meeting because we were in the process of evaluating their aged inventories. Okay. And really what came up there. So just kind of shortcut what happened there. We're just trying to figure out, okay, let's, let's kind of, we did an episode many months ago around inside the box, like working inside the terms that we work with and by your payer. So if you just start painting the edges of the box and, You've got term of loan that you try to stay with. You've got a PTI that you try to keep as a cap. You've got selling price that is going to drive, you know, a lot of these things down payment, of course, would be another lever. And so when working with those numbers, we just kind of said, you know, not very many customers can afford this aged inventory. Our typical applicant can't afford it. So that's what we were working through is what is the income of your typical applicant? And you resurrected an old poll that we did back in April about what is the average hourly income. Because most of our clients are not salary. They're hourly. And so what is the typical hourly? And so there are some... Did we get some new people that chimed in on this? A few. I think the voting was like forty-four respondents. And you can see on the screen there that... Yeah. So predominantly, I, you know, I... Fifty-six percent. Fifty-six percent is fifteen to seventeen fifty. And then, so it's basically fifteen to twenty dollars an hour is most, most everybody. Right. That, that... I can't see without my glasses so yeah your typical applicant so and and the the largest group was in that fifteen to seventeen fifty an hour so this poll has been april of this year yeah and we just kind of brought it back I'm not sure that wages have increased that much no and certainly one of the things that came up in our newcomer meeting last night is people are sensitive to this fact that even if the even if the income hasn't changed the what has to go out for groceries and as in yeah it's it and hopefully it just kind of like waterfalls itself down to to uh to increasing wages but maybe not I don't know um yeah so we better get to this tool because this device is going to run out jim's like really really do you want to introduce it and I'll go get your power cord Yeah, if you can untangle it, that's cool. I can, absolutely. I'll be right back. Yeah, so we'll get started sharing this thing. It's basically just what you've got is a calculation tool that really uses a grid layout. Let me show you the behind the scenes part of this. This is going to be the settings in the background, so a second sheet in the workbook in this case. We just kind of said, what's our typical payroll withholding. Those are numbers that you could adjust on the back end, a starting selling price for, uh, you know, your, your, your vehicle range. And then we go up, two thousand dollar increments over there and then a target maximum term, then an APR. And now once we have that in there and then we can add an amount that would be calculated on top of selling price for a typical add on. So we just use a rough number and we had a pretty precise number in the case of the dealer that I started working with. But the idea is just to be able to give you a pretty roughed out financial window here, like what's the term box look like? So now once we've got those in there, what we can do is we can come over here and start to experiment with the income. So if I'm sitting here and this is primarily a training aid for your sales team to be able to show them kind of what we're working with and why there's limitation. Thanks, Michelle. She's handing me power under the desk. So the the idea then is once we have you know, if we think about like a training aid, if we're actually going to show this to our team and help them kind of understand the box that we're wrestling within all the time, because we deal with it all the time, but this just helps us kind of see it in a little more visual way. So I think that you can see at the top there, if you can read it well, it's basically says that I'm going to increase it on my side so I can see the screen inside the thing. Then what you've got is hourly pay at the top has got buyer one and buyer two. So you would just put in the gross amount. You know, if I'm sitting here thinking about to my typical customer and I've got this grid started at twenty five dollars an hour. So I started a little high with the idea that you can see that these areas in red or this is kind of not going to fit because it's it exceeds our term. You know, we know in the background that our target term and I explained to our newcomer group last night, if I were If I were working with this tool in front of a customer, like I'm just going to be totally transparent work with them to say, you know, this this red stuff down here shows is kind of exceeding our target maximum term. We try to keep term at around forty two months in this example because. We don't want the term to get too long. You don't want to get the term too long. That means more interest. It means you can find yourself in a difficult spot if we don't keep it a reasonably short term. And so you obviously want to pay it off as soon as possible, Mr. Customer. So this is basically just kind of framing out. It shows you that if... there's a grid there at the top that shows down payment, depending on your down payment range, you know, because dealers are in the habit of kind of asking what kind of down payment are you working with? So you could look on the grid here and see, but, but that red says we're getting beyond forty two months. And if I were again, talk to the customer, I'd say we, we try to keep loan term here around forty two months as a max. We've got a little wiggle room there, but that's best for us and best for you. And so this is kind of typical. And so you can see the, the, The vehicle price range over on the left side of the grid and then across the top is the down payment. So you've got it at twenty five. Twenty five was not even in that seventy five percent. So what if we were to go down to seventeen fifty, which was at seventeen fifty or it was fifteen to seventeen fifty. So the high end of where most people are is. And see how that changes. Yeah. Well, I just think what happens then is, you know, you look at this so that we've got a target term of our target PTI rather of twenty percent. We're trying to keep our payments at no more than twenty percent. which is why yeah okay so keep in mind we put in a withholding percentage there I think we got it twenty five percent so if you think the customer makes seventeen fifty withhold twenty five percent of that you know in terms of you know their basic tax withholding to get to a net take-home pay And we try to keep our payment at no more than twenty percent that just you can see the math there at seventeen fifty at a twenty percent PTI. We'd be at about a four fifty five max payment, which is workable for most customers. That's in a range that a lot of our dealers are doing. Mm hmm. But what it shows here is all those numbers in red and that stuff at the bottom. I think what it's telling us, I haven't actually finished evaluating that part of the formula, but I think it just doesn't amortize. I think it doesn't, it actually doesn't amortize properly at that. So do you, do you have, cause you were showing me another screen which showed the dealer's actual inventory. Okay. And, um, is that something that you can show? Cause that, I thought that was like really, really interesting how out there were like, there were gaps of, okay. So based on your inventory, here is the. Yeah. I don't have that up here. Yeah. It's not here. So, um, um, it's, we can certainly bring that back to a future conversation, but, but yeah, you're basically applying this kind of information. So I had it, you know, where it could apply it to all the cars that were You know, more than a certain age range. And then you could just see. And so the end result was you really could see that unless I'm going to get a customer with more income or more down payment. Mm hmm. then I'm going to have to drop the price probably on some of this inventory because the customer simply can't get to my term. It's my target term as a dealer and I can't, I can't really get there. So I mean, they're going to wait for the right applicant and my cars are just going to age. Yeah. Right. So, you know, there's another question that's been, uh, that like kind of flows in and out of this is, is, um, uh, LTV, uh, Um, and, and so, you know, when you say they've got to keep it under this thing, this, um, when this is something that probably a lot of the, the lenders out there would go, yeah, this makes sense because it's a higher risk. It's just, it's a much higher risk, um, to the, to the customer. And, you know, you, you know, you've got, you've got, uh, um, which part are you saying? Well, I mean, it's, it's, maybe pricing, where the pricing is, because it would be interesting to kind of like correlate, if if you dropped the price of a vehicle by a thousand dollars, what would that do to the LTV? And what would that do to this kind of chart? Well, you can see it right there. If you just looked at thirteen nine ninety five versus eleven nine ninety five, let's assume it's the same car. These don't have to be different cars. So you can see that if the price were lower than the customer can, it can fit my target term, the customer's income. And that's kind of what I see as a dealer when I was underwriting deals myself. I tend to negotiate with or ask our team to negotiate for as much down payment as can be reasonably collected without making the next rent payment pass due. So I would negotiate for as much down payment as possible, negotiate for a payment relative to their income. So looking at PTI and then just looking at, okay, on the car that we're talking about, where does that put me in length of contract or term? So I was used to having that be the last variable. So I could make an approval decision based on term. Why do I leave that as the last kind of variable? Because nobody knows how long that car is going to really last. And so I see dealers, and we've talked about this one in the past, is like I say, dealers... quoting their payments based on a certain term. You'll see it a lot. I mean, these VA reports come in every month and every month, the average term is thirty six months, thirty six months. Like they're forcing the customer into a thirty six month term for some reason that, you know, they can explain. But I mean, thirty six months prior to covid was just kind of based on the price of the car. We knew that we were going to that most dealers kept it at thirty six months or whatever their number was. But, I mean, when you were a dealer, how long was your typical term? Oh, when I was a dealer, it was more like thirty months. Okay, so, but that was, that was, like... But that's a low ACV, low selling price kind of model. But it's also, you know, car prices have changed. All of these things have shifted an awful lot. And so, the thirty-six months, is that something that... The dealers that have been in business for a decade or more are like, nope, thirty six months, nope, thirty six months. Or is this something to that new dealers coming in or like, no, we keep it at thirty six months. Do you know what I'm saying? Do you understand what I'm asking? I think so that most dealers don't most new dealers don't really know where to start. And I just find that it's a it's a. It's a real simple question, and I think it... I've talked around it, and we've spoken about different elements of it in the past, but it's like... if I'm a dealer and I'm training my sales team, then I either ask them to, it's called in the software, it's called rolling to term or rolling to payment. It's like you calculate to one or the other. So you plug in these levers and then it just spits out the result. So I think what happens in training and sales based on everything I see, just broad observation, but Dealers are quoting a term and they train their salespeople, go in there and work it at thirty six months and let's see, you know, see where the payment lands. And I think that's kind of what what happens with newer dealers. That's generally what they do. They hear about term. And so this is kind of way to for us to just kind of make term. the variable and say, what's too long. So we could spend all day here talking about what is the right term. Obviously in this, we don't know the year, make miles. We don't know any of that stuff here to make a judgment. But if I'm thinking about it in terms of our program, if I'm a dealer and I'm training new salespeople, then I'm saying our program is generally this. We try to keep to about, you know, be a little longer if I've got low miles or whatever, but that's kind of the program. Right. And so what this does is kind of the tool gives the salesperson, the new salesperson and the customer a visual way to say this stuff in white, this is a fit. Like this looks like this could work well within our program and we'll have a higher likelihood of being approved. Right. It's just, it's a simple thing to say. If we stick to cars in the eleven nine range, it looks like most of that stuff's going to fit, you know, and then look at your down payment. You can see that. All the down payments keep us within thirty six months or forty two months was our term here, which I think is another thing that's really interesting is that your down payments range from five hundred to twenty five hundred dollars. And there's not an awful lot that the higher down payments open up. That's a good point. So, but you can see that a car at thirteen nine, let's focus on that row thirteen that is thirteen nine. You can see that those don't work until we get to about seventeen fifty down. Right. And then that's just barely squeaking. Yep. So it's inside our term. So it's just a way to illustrate, you know, on a screen that this is kind of the, the, the limitation, the box that we work within. And I think it's, it should be helpful to dealers to start to analyze, and we'll be bringing this back to all of our V eight people like, to be able to analyze their own model and structure. This is designed to look at a single kind of structure. Obviously some dealers have tiered APR, right? They have tiered based financing. And so they have different rates. And so that would, this wouldn't, it's not built to do all that just yet. It's just built for one. Yeah. It's built for a single, you know, and most of the dealers we work with have a single price, you know, single, single rate. And most of them are in a similar structure, but yeah, This basically is meant to kind of help frame that in a way that we can better see and help the customer. For me, I'm thinking about how do I help the customer better understand why this doesn't fit? Yeah. And, you know, I think about the different softwares that are out there that help with underwriting. And, I mean, there's multiple out there. And there's not typically, I mean, there's, I know that one of them just recently did the four square so that you can show and, and be able to help a customer visualize. But most of that is not, is not presented to the customer. And, and also, you know, the, the, I think that the important thing is if you're going to use this to work with one of your, potential customers, be as simple as possible. Because we know that most of our customers are not financially literate. And that sounds really awful, but it's just so true. They don't understand interest rates. They don't understand term. They don't understand a lot of these things. All they're going to want to know is how much do I have to pay every month? And that they just not like, how long am I going to be paying this every month? But how much do I have to pay every month? I know what's going out, you know? And so making it, I love that there are some softwares out there that have created something that can be visual for, and we've been huge fans of the Foursquare too. But I love this. So it kind of, it can take, all of the inventory or potentially and say, this is why, and kind of give them an opportunity to, to educate them a little bit on, you know, we need to keep it in within this because, and, and that, and, and I love the idea. If you've got a program that says, and at, and, twenty four months, we can trade you into something different. So, you know, or whatever. And so it's like we need to keep it within this box. If you're going to not trade in and all of that, this is this is where we need to be. This is part of where, again, in training, if you're training a salesperson and if I'm a white hat dealer and I'm training a salesperson, I'm saying, look, sometimes we have to look out for the customer's best interest because they would agree to more payment than this. They will because they need a car. You're in a rock and a hard place and they're going to just say yes to anything. They would agree to a longer term. They would. They would agree to a higher selling price. So this is the part that we have to, it's on us to kind of make sure it's a sensible fit. So what's sensible look like? Well, this kind of gives you a visual look at what sensible looks like. And their, their limitations are how much they have for down and how much they can afford every month. That's, Yeah, you can't. So in these variables, the things that I can adjust, I can't change their income, right? They could not, I could add a co-buyer. If I add, you can see if I come down here and add a, let's say my co-buyer, you know, is available to... come in and they make ten dollars an hour obviously this thing is set up at forty so look at how that changes everything yeah that expanded now if we have that real income and the second buyer is fully committed to support the loan payment then it opens up some more possibilities for us but without that it's like we can't change the customer's income so that that Box is pretty limited. I mean, we have what we have there. This is in yellow because it is changeable. We could agree to stretch. Let's say the customer says, well, yeah, I could afford more payment. I don't have rent or whatever. And so I could handle five twenty five. You know what I find so funny about that? So I just think about things that we have heard from customers. I only have five hundred down, but I can afford an eight hundred dollar payment. You see that in the social media threads that dealers say that that happens a lot. And so, you know, if you're an inexperienced salesperson, you might say, cool, we can make a deal. You know, but this is where I'm saying, if we're training salespeople, we got to say, so I can stretch again this PTI. I could push that up a little bit. Most dealers don't like to see twenty five percent or more, but I could push this. So let's see what twenty two percent looks like. right at a five hundred dollar payment I was just accident but now if I look at a five hundred dollar payment you can see that it opened up some open some more stuff like I can I can now if I'm willing to stretch the pti and I just know as a dealer underwriter when I'm when I'm making the decision to stretch the pti that I'm putting pressure on the customer because fuel prices grocery prices that you know they've got all these things one of the things we talked about last night in our v-eight group is A newcomer dealer who kind of was without any coaching from us. He just kind of was talking through the idea that he just felt like that in deciding payments, he was aware that customer had rent and they had groceries. And I stopped and said, I'm glad you've mentioned that because it's always been my perspective that the customer that we finance and buy here, pay here. we we should all recognize that they're going to prioritize having a roof over their head and then feeding their family feeding themselves and feeding their family so I I'm not surprised if they're going to put that ahead of the car payment as a priority so we need to allow for that as we look at deals and making a judgment and whether we use software or not we just need to be sensible and think that through yeah and so this what happens when we start stretching that pti or increasing that pti to make a deal work then we're putting pressure on the deal. And then not to mention, we haven't even talked about warranty, not warranty, like is the customer going to be responsible for repairs in this scenario? Yeah, and cars do break down. Do they? Yeah, they do. We did an episode earlier this spring on PTI, and And, you know, I think it was the April thing where we're looking at, seventeen fifty was about the average. And, you know, we we kind of went through like, all right, everybody just and this is something that I think would be beneficial for a lot of our customers, too, is to say we do go through what do you pay for rent? You know, the average family spends X amount per person for food, you know, utilities, all of that. And so and so if they like, no, I can afford a higher payment is and we talk to dealers all the time that are that have been in the business for a long time. And they're like, yeah, you have to be budgeting coaches. It's like to help help understand when sometimes when someone isn't isn't really literate in this kind of thing, they're thinking, I need a car. And I'll do whatever it is that I need to do to get a car. The other part that I remember from this conversation when we had back in April, and it's a slight squirrel, is if you're not paying your people seventeen fifty to twenty five dollars an hour, then you're putting them in a hard place because they can't even afford a car. So it's like, just be thinking about what, if you're not paying your people the same as what it is that, that you need to be able to put someone in a car, they need to rethink what you're paying people. That is a squirrel. That is a squirrel box. That is a soapbox. It is a soapbox squirrel. And I do. Yeah. And I, I, well, and that's, and that's the thing is, you know, as we're talking about has income risen? No, but it needs to. Yeah. And I think the other thing that would be a natural conclusion from this is if I'm a dealer and I work through this grid, I can see that if my if fifty six percent of my applicants are in the fifteen to seventeen fifty dollars range, then I have only really two places I can go here. then yeah I can't change their income right I I have a cap on my pti if I'm going to be sensible because everybody from everybody says ability to pay is one of the most critical drivers so pti pti pti so for those that are not familiar payment to income ratio which is almost always calculated on net income so that's what we've got here is a pti there on the screen is the um of net income so that just says if I'm if I'm against that box I'm against a cap on income I'm against a cap on pti ratio payment ratio I'm I'm whatever the down payment is what the down payment is right so the only places I can go will be selling price apr and term of loan I either have to stretch my I have to reduce my APR, I have to reduce my price, or I have to stretch my term, right? Those are the only ways that I make it fit for this customer. Or I could just sit around and wait for customers who make twenty five dollars an hour. But what we saw in that dealer's case is they don't see that kind of income. Let me I have that on another calculator or let's just do it again right here. Twenty five dollars an hour. Again, at forty hours a week, this is no overtime, nothing, just straight forty hours. That's your customer has to bring home thirty two hundred dollars. That's thirty two hundred dollars of take home pay that calculates out to be. Dealers just don't see enough of those kind of applicants. They just don't see that kind of verifiable income often enough. And so if that's our box. Then we just have to kind of recognize. And I think, you know, certainly people are going to see twenty dollars an hour here and there. But if you're if you're in that, you know, you just can see that this is I kind of have to I kind of have to be at thirteen nine based on these numbers. I'm going to stay at a twenty percent. PTI, I have to be at thirteen nine. There's a lot of down payments that work, but I can hold out for two thousand down and then I can go to fifteen nine and still make it all fit at forty two months is our example here for those who are just tuning in late. But yeah, in fact, I'll just show quickly for the Anybody who might be tuning late, we've got these settings in place, twenty five percent payroll being withheld for taxes or what have you. A starting price that drives the grid of two thousand dollar increments than a forty two months max term as a target and then twenty six percent APR in there. And then I've got three percent built in for add on. So it'll do a calculation on the amount of finance. So this is kind of I think it's just, you know, by helping you see it in grid form, the down payment you can see works. And obviously at some of these, the term you're not going to see twenty five hundred down on a ninety nine ninety five. That's an eighteen month term. You're not going to see enough of those deals. You'd love to, but you're not going to see enough of that. But what it shows, too, to me is that going two thousand dollars more a month or two thousand dollars more for the down payment doesn't really necessarily open up a lot of inventory. Good point. I mean, I think, I think this grid lets dealers test the waters on their own kind of deal structure and make a judgment about, man, it's just my, my stuff. That's, you know, if I'm looking at this grid and I'm saying, okay, my customers are typically a fifteen to eighteen dollars an hour. I've got a load, even if my customer has twenty dollars an hour of income and I try to keep it a twenty percent PTI and I try to keep to a forty two month term. I don't have very many applicants who are going to be able to buy a fifteen nine car. Yeah, this is this whole all of the numbers, all of the the drivers that you have in here are about success of the customer and success of the dealer. And so, you know, it's it's because we really are. That's that's one one thing that, you know, we talk about frequently is that, yes, we're here to coach dealers, but we're here to coach dealers how to help their customers be successful. And so how do we help customers be successful? And the dealer's still making a pretty darn good income. And I look at the pricing on a lot of these. I look at inventory. We talk to different clients of ours. And, um, so to me, it's, it's like when you start getting into vehicles that are twenty thousand dollars, it's, it's, and, and it's just not, you're not setting anyone up for success. You're just not. And so why it to me, it's like if you're unless you have a niche, you know, your your your target customer is not the typical buy hair, pay hair person, but maybe it's someone that has. recently declared bankruptcy and has, you know, still has a decent income, but they just need to lift up. That's a different, a little bit of a different story, but most of our customers are this. We have plenty of dealers doing twenty thousand dollar selling prices and their portfolio is performing fine. So Some of them are doing a forty eight month term instead of forty two we have here. It's not that it's not that they're setting up a customer to fail at a twenty thousand dollar selling price. It's just the question for me becomes at a twenty thousand dollar selling price. And, you know, this is kind of a strategy with leasing. It's like in the lease scenario, you try to the price is less important. You trade the customer, you know, periodically and. and try to get more turns out of the car that has a higher cost and a higher selling price. So that's part of the strategy there. And some dealers are adopting a similar strategy and buy your pair. So they have higher end prices and they still do business. I think the question we have here is, Um, how many customers fit that profile? You know, some, some dealers are in a market and are established and are succeeding with their marketing and attracting an applicant that makes twenty five and thirty dollars an hour. So so it can work. I mean, there's different there are different layers to this buy here, pay here, you know, business out there, lots of different business models. I think for today it was like going off of that poll back in april if if we're if most dealers are really seeing applications at a at an eighteen I've got the seventeen fifty loaded on there again you can just see that you know I could stretch my pti and this is where you know I start to put pressure as I said so I I pushed it from twenty percent let me just do it again so people can follow it on the screen we started at twenty percent is where we like to stay But you can see there's almost nothing at thirteen nine without a big down payment that can work. If I stretch it to twenty two, then that opens up some more cars. In the thirteen nine range. And if I go all the way to twenty five percent with this customer, it opens up some more stuff at fifteen nine. Right. But I'm again, this is my own judgment about how and what kind of pressure do I create and what how do I reduce the likelihood of success on this loan when I when I start to stretch that PTI? So this is all it's everything I was trying to illustrate in terms of why that matters. Okay. So, um, side question, if you are a capital provider, what, um, what are the, the, um, what are the levers here that, that are most appealing to you? Okay. So this is, this is Jim capital one-on-one. Is that what we're talking about? Cause I, I quit, I quit trying to predict what lenders will do a long time ago. Like, I just, I don't know what they're going to do. I think I could have figured out. I don't know what they're going to do. yeah so it's uh they you mentioned ltv earlier like that's a separate that's another that's a different thing that's a different conversation I'm just trying to make it fit I think um based on we had jimmy rambo come to our v eight plus oh yeah you had jimmy jimmy and um and and steve burke steve burke and brent carmichael who deals with a lot of uh data sure through the twenty groups through NCM speaking you know as a finance company lender Spartan does lines of credit they do bulk buying and so you know thinking as a lender and Jimmy was in banking before he was for those don't know Jimmy's long time we really love Jimmy yeah he's a great guy but he's um he's with Spartan and uh So he kind of spoke, you know, as a lender. And, you know, among the things he talked about was term of loan. Obviously, LTV is something they look at pretty heavily and they're going to continue to. But term? And term is going to be something they watch in terms of making sure that we're not, you know, stretching term because it's another function of LTV. So we raise the price way up high so we can have a nice gross profit in the deal. And the only way we can make that really fit if we're sensitive to PTI is term. So naturally a lender would look at term. I certainly would if I would Jim, Jim one Oh one capital program over here, then that would be, I would be watching term. Um, and it has to do with, this is where in the past that people like, you know, Jim really reasonable life expectancy of the car. Like it's so nebulous. Right. But it's like, it's, it's what I'm looking at. It's why I roll to term. I would, I would negotiate with the customer on down payment. I would negotiate with them on payment amount. That's a good fit. And then I would roll to term and see if I can live with the term based on the miles and whether it's a Toyota or a Hyundai or, you know, whatever. So this is where you kind of, you know, start to make those judgments. And I think term is going to be, you know, that's what we're kind of looking at here. We've capped, we've capped the term, you know, we kind of set our target max. That's why everything in red, there's, you know, outside of term and, and it just gives a visualization of why it just doesn't. Is there a box for most lenders for term? Yeah. Um, is it in their covenants? I can't recall. I mean, everybody's going to have different covenants, but I can't recall seeing actual maximum term in anybody's covenants. Um, but, but you would, you would, because of this box that we're working in, when I remember we asked about LTV and so for those who are not familiar to tuning in, um, LTV is loan to value. And in case of a lender, it's the actual loan amount to the consumer, like the amount financed relative to the actual value, actual black book values on an average black book. So it's a, it's a book value market value of the car. So they're looking at that ratio pretty carefully to make sure that. And so now, but if your LTV is high, then the, so the, you've already factored in down payment when you're looking at the amount financed, right? Because the LTV is after down payment. So this is just the amount that we're financing. And so if we run the price way up, and we get a decent down payment, then the only place to go is term. I mean, so we're either going to push the customer too high in PTI or we're going to go to term. So this is why I think a lender would be looking at term in addition to LTV. But if LTV is high, that's often that's the only place to go is link the contract. And we've seen dealers obviously in a post COVID period, these dealers who were at thirty six, now they're forty two months. I'm hearing somebody here pay dealers doing sixty months. We never used to have that. but but yeah you you and I you know are old enough you can see the gray here I mean I remember when I first got around the car business you know forty eight months term on a new car was on a new car and then then seventy two came around and now eighty four months on new cars it's like you know that whole thing is just stretching and stretching and yeah and so that's where I I think you know it's without getting into uh being a prognosticator I think that's not sustainable. Like we, we can't keep doing that. The cars don't last that long, you know? So, so it's all a, it's all a question of fitting it inside this box that we talked about. So, um, we'll try to remember to share. There's other podcasts from the past that we've done in, um, that you can search our YouTube channel and find the, um, you know, the, the parts that are, I got to try to get out of this view so I can see the panel. But bottom line is you can find these to a search in our YouTube channel for some of these things. Like you can look at reasonable life expectancy. We did, we did our own four square in the past. So we can try to also find that one because we, I have a four square that I've created that does similar things in terms of changing colors as you change these various boxes. And, But I think this one was meant to kind of show, to give a sample of what the customer could afford. Yeah. So, we did a lot on the screen. So, if you're listening just to the audio on our syndicated podcast stations, please go to YouTube and like and subscribe while you're there. And then you can take a look at all the different charts. If you have any questions about them, please feel free to reach out. Yeah, we're always... Jim gets text messages and things all the time from people. It's like, I have no idea who you are, but you're asking a question. Let me answer it for it. Thank you so much for joining us today, everybody. We really appreciate you making us part of your day. It is Friday, so we have a weekend coming up and we have a weekend coming up too. So looking forward to that. um have yourselves a great rest of your day and again if there's anything that we can do to help you please feel free to reach out nine oh three eight one six oh two one six and there are there is room in the v eight groups too so have a great day everybody thanks so much for joining us
