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Originally published by Jim Henry on Forbes.com.
J.D. Byrider, a chain of so-called “buy-here, pay-here” used-car dealerships that cater to customers with risky, subprime credit histories or no credit history, is rebranding itself beginning this week, to encourage a more customer-friendly image and to signal improvements aimed at friendlier and faster customer handling, especially online.
“The big change for us is more on customer engagement,” CEO Craig Peters said in a phone interview. “We are doing more in the digital space. Our web site — and not just our web site, our whole online presence — is much improved.”
J.D. Byrider, based in Carmel, Ind., was founded in 1989. It serves about 150 U.S. dealerships, including 30 company-owned locations. The rest are independent franchisees. Altamont Capital Partners acquired the company in 2011.
Byrider provides franchisees with dealership management software and other services, but the independent franchisees run their own businesses and secure their own funding in order to finance consumer loans.
“byrider: Buy. Finance. Drive On,” is the company’s new tagline. The new branding drops the “J.D.” in J.D. Byrider, and lower-cases the “byrider.” New ads emphasize the idea that customers can get on with other aspects of improving their lives, once they have a car.
“We are focused more on quality and service,” Peters said. New video advertisements sympathetically show the miseries of not owning a car, like walking in the rain, carrying groceries home on foot, or carrying a small child on the bus.
“If you could just finance a car, life would be so much easier. So stop wondering, ‘What if?’ and start moving forward. byrider: Buy. Finance. Drive On,” one ad says.
In general, buy-here, pay-here dealerships as an industry have a reputation as the dealership of last resort to credit-challenged buyers. Buy-here, pay-here customers typically pay much higher interest rates than prime-risk customers, and buy-here, pay-here dealers often require customers to accept starter-interrupt devices on their cars. If they miss a payment, the device makes it impossible to re-start the car once it’s shut off, until payment is received.
On the positive side, a buy-here, pay-here customer probably can’t get financing anywhere else, and the industry argues the starter-interrupt device is probably preferable to the alternative, which could be repossession. Dealers also argue that if customers make their payments on time they can establish or re-establish a more favorable credit history and maybe qualify for better financing next time.
The name “buy-here, pay-here” means the dealer funds the loans and collects the payments. In fact, “buy-here, pay-here” is becoming an outdated name. Many buy-here, pay-here dealerships accept automatic, recurring payments online, or payments via customers’ mobile devices, so customers don’t always have to pay “here” any more.
The point is, that’s in contrast to franchised new-car dealers who sell used cars, and independent used-car dealers. Those other dealers typically act only as a middleman on finance contracts for third-party lenders, like banks, credit unions, independent finance companies, and the automakers’ “captive” finance companies. The lenders collect the payments, not the dealers.