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Want to maximize the value of your Buy Here Pay Here (BHPH) portfolio? Here's how you can prepare it for sale and attract top offers. By organizing your contracts, cleaning up payment records, fixing collection issues, updating vehicle details, tracking key performance metrics, timing the sale right, and building professional sales materials, you can boost your portfolio's value by 15–25%.
Start early - 6 to 12 months before selling - to make your portfolio buyer-ready. These steps ensure your portfolio stands out and fetches premium valuations.
Organized and well-maintained contract documentation is key to building a strong BHPH portfolio. Clear, complete, and easily accessible contracts not only inspire buyer confidence but also enhance portfolio value.
Use consistent formats for contracts to ensure clarity and simplify the review process for potential buyers. Create a standardized template that includes sections for key details like payment schedules, vehicle information, and terms. This consistency reduces risks and makes due diligence easier.
Standardize file and folder naming conventions as well:
This approach ensures better organization and sets the stage for improved contract integrity.
Each contract should cover these critical elements:
Regularly review contracts to confirm all required state-specific details are included and compliant.
Digitizing contracts improves accessibility, security, and efficiency. A robust digital document management system should:
Look for systems with features like:
Keep both digital and physical copies of signed contracts, as some jurisdictions may require original signatures for legal purposes.
Finally, conduct quarterly audits to ensure all contracts - new and existing - comply with your documentation standards.
Keeping accurate payment records is essential for demonstrating both the performance and risk level of your portfolio. These records can significantly increase its value when it's time to sell.
Document every payment with key details like the amount, date, payment method, status changes, communication logs, and any special agreements. Digital records that show both successful payments and collection attempts provide a transparent view of how the portfolio is performing and how efficiently it’s managed.
To enhance portfolio performance, consider these strategies:
A consistent and predictable payment schedule demonstrates reliable cash flow, making the portfolio more attractive to buyers.
Once payment timing is optimized, tackle any payment-related problems without delay:
"Selling auto notes efficiently involves understanding the market, working with the right buyers, and leveraging strategies that maximize profit." - Ivan Korotaev, Debexpert CEO, Co-founder
For each type of payment issue, maintain detailed documentation:
| Payment Issue Type | Required Documentation |
|---|---|
| Late Payments | Dates of payment attempts, communication logs, reason codes |
| Modified Terms | Original terms, modification details, approval records |
| Default Status | Timeline of collection activities, vehicle recovery status, loss mitigation efforts |
Regularly reviewing your portfolio helps identify recurring payment issues, so you can address them before they affect its value. Well-documented payment histories and collection efforts can help portfolios achieve up to 90% of their debt value when sold.
Improve portfolio performance by addressing collection challenges and ensuring effective account recovery.
Evaluate your portfolio data to pinpoint accounts that may be at risk. Look for these patterns:
Once identified, prioritize these accounts based on their risk levels to focus your efforts where they’ll make the biggest impact.
1. Enhance Digital Communication
Combine automated tools with personal outreach to connect with customers across multiple channels:
2. Offer Flexible Payment Options
Make it easier for customers to stay on track by tailoring payment solutions to their needs:
3. Adopt a Customer-Focused Approach
Build trust and improve recovery rates by focusing on the customer’s experience:
Track every step of the collection process to ensure transparency and compliance:
"Empathy is key to debt recovery in difficult times." - David Alexander
Structured tracking should include:
Taking these steps not only improves your collection process but also sets the stage for updating vehicle records in the next phase.
Keeping vehicle documentation accurate is crucial for maintaining your portfolio's value. Well-organized records not only reflect professional management but also help buyers assess risk more efficiently.
Make sure to document these key details for every vehicle:
Additionally, record any modifications, liens, title changes, or insurance claims that may affect the vehicle.
Follow these steps to ensure the accuracy of your vehicle records:
Once verified, ensure each vehicle is accurately linked to its corresponding loan.
Ensure proper documentation by maintaining records such as:
| Document Type | Purpose | Update Frequency |
|---|---|---|
| Sales Contract | Establishes ownership terms | At origination |
| Title Documentation | Proves legal status | As changes occur |
| Insurance Records | Confirms coverage | Monthly |
| Vehicle Inspection Reports | Tracks condition | Quarterly |
| Market Value Assessments | Updates portfolio value | Monthly |
Store all records digitally in a central location for easy access and efficient management.
Keeping a close eye on key performance indicators (KPIs) is crucial for getting the most out of your BHPH portfolio. These numbers help buyers assess the portfolio's quality and decide on its market value.
Pay attention to metrics like default rates, loan-to-value (LTV) ratios, interest rates, loan terms, yield, recovery rates, collection efficiency, and average collection times. These numbers paint a clear picture of your portfolio's health.
Take steps to improve your portfolio's metrics by:
Showcase your portfolio's improvement with:
Once you've streamlined documentation, payments, collections, and vehicle records, the last step to getting the best value for your portfolio is timing your sale effectively.
With wholesale prices climbing and reconditioning costs on the rise, many dealers are opting to sell their notes. Here's how to make timing work in your favor.
The BHPH market is shaped by various factors that can impact portfolio values:
Understanding these trends helps you prioritize the right improvements to position your portfolio for maximum value.
Before selling, address these areas to boost buyer confidence:
After refining your records and collections, timing your sale is crucial. Look at seasonal demand patterns and overall market sentiment to identify the ideal time to sell.
"Selling BHPH Notes allows you to spend more time doing what you do best. Selling more cars and less time worrying about collecting on your auto loans."
"Selling your auto loan portfolio is the most effective way to build capital for your buy-here-pay-here dealership without adding on new debt to your business."
- BHPH Dealer Capital
When your sale timing is finalized, focus on creating professional sales materials that highlight your portfolio's value. A well-organized presentation makes it easier for buyers to understand your portfolio's strengths and potential.
Provide clear documentation that showcases your portfolio's performance and attributes. Key items to include:
Transform complex data into easy-to-read visuals that quickly communicate your portfolio's value:
| Chart Type | Purpose | Key Metrics to Display |
|---|---|---|
| Line Graph | Payment Trends | Monthly collection rates over 12–24 months |
| Pie Chart | Portfolio Composition | Loan age distribution and vehicle types |
| Bar Graph | Risk Analysis | Default rates by credit tier and loan vintage |
These visuals can help potential buyers grasp the portfolio's performance and risk factors at a glance.
Debexpert's platform offers tools to enhance your portfolio presentation. Use features like the analytics dashboard, secure file sharing, and CRM to create detailed reports, organize documents, and monitor buyer activity.
These tools ensure your portfolio is presented clearly and effectively, emphasizing its strengths. By combining strong performance data with a polished presentation, you'll position your portfolio to attract competitive offers.
Using these seven strategies can increase your BHPH portfolio's sale value by 15-25%, turning it into a buyer-ready asset.
By focusing on standardized contracts, accurate payment records, updated vehicle details, clear performance metrics, well-timed sales, and professional sales materials, you create a portfolio that stands out to potential buyers. These steps work together to enhance the overall value of your portfolio.
Preparing your portfolio takes time. Start making improvements 6-12 months before the sale. Begin by standardizing contracts and organizing payment histories. Then, update vehicle records and collections while keeping a close eye on performance metrics.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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