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How Vehicle Tracking Technologies Can Boost Buy-Here-Pay-Here Revenue

by | Jan 28, 2022

For buy-here-pay-here dealerships, the stakes are always high. And with a historic shortage of vehicles on the market, business has only gotten riskier. Used car inventory is down by 17% since the pandemic began, and the average used vehicle cost has jumped from $21,000 to over $27,000. Because of the risks inherent in the buy-here-pay-here business model, your options are limited. You can raise prices or extend payment terms, but buy-here-pay-here dealerships serve populations that already have difficulty buying a car through typical means. You can only raise prices so much before you exceed your customers’ budgets. And extending payment terms increases the risk to your portfolio.

Vehicle tracking technologies offer an opportunity to mitigate some of the risks inherent in the buy-here-pay-here business model while also empowering these dealerships to serve their customers better.

Improve Collections Processes

While the rate of auto loan delinquencies is currently low, it’s still important to keep an eye on consumers’ ability to sustain making higher-than-usual payments. Inflation, along with lost wages due to COVID-related closures and lack of childcare, will continue to squeeze consumers’ wallets. When a customer falls behind on payments, it can be complicated to determine the next course of action.

It’s in the best interest of both parties to make adjustments that keep the driver in the car. Typical outreach efforts follow one-size-fits-all patterns, where collections agents deliver standardized messaging and offers based on the timing and responsiveness of the customer. However, tracking technology can help improve communications by engaging your customers earlier.

For example, you can customize trackers to alert the customer when a payment is past due. Such alerts encourage customers to call in and speak with a collections agent to make a payment or negotiate an arrangement. By prompting past-due customers to reach out instead of waiting until your staff contacts them, this approach can reduce the number of outbound calls collectors have to perform.

Take a Proactive Approach to Mitigating Losses

If a buyer stops making payments, doesn’t respond to custom alerts, or exhibits other behaviors predictive of delinquency, you can seize control with proactive tracking technology. For example, if a vehicle hasn’t moved for a while, that can indicate it’s been abandoned. The same goes for a low or disconnected battery. GPS trackers can be outfitted with sensors that alert you when a vehicle has been idle for a length of time or if the battery is getting low. If a customer attempts to remove the tracker, it can send you tamper alerts so you can quickly take appropriate action.

Impound fees, which can quickly spiral out of control, are a significant source of lost revenue for buy-here-pay-here dealers. Transport, release, and storage fees can easily surpass $500 in some markets, and that’s if you find and retrieve the vehicle quickly. Time is of the essence, yet you have no control over how long it will take the towing company to contact you. Using tracking technology with tow alerts gives you back that control, allowing you to intervene and intercept the towed vehicle as quickly as possible.

Manage Your Inventory More Efficiently

With inventory being so limited, it’s harder than ever to match car shoppers with the perfect vehicle. If you manage multiple lots or car dealerships, GPS tracking devices can help you determine whether you have the right vehicle in stock, even if it’s parked at a different location. Being able to quickly view the location of all of your vehicles at a glance reduces the time and resources needed to inventory your stock, ensures higher levels of accuracy, and increases the likelihood the customer will make a purchase.

You can also monitor when a vehicle is being moved and determine whether the movement is a test drive or relocation to another facility. And if a vehicle is on the move during off-hours, you can notify authorities, so the thieves don’t get too far.

Once a customer has become so delinquent that you need to perform a repossession, on-demand vehicle tracker recovery technology can help you hone in on the vehicle quickly. That dramatically reduces repo costs, allows you to retake possession of your collateral sooner, and put it back on the lot for resale again.

How Buy-Here-Pay-Here Dealers Can Use Vehicle Tracking to Add Value for Customers

GPS tracking technology doesn’t just solve problems for used car dealers. Vehicle tracking devices can also solve challenges for your customers, which can boost your value proposition. Drivers can access a wealth of data from the trackers using an app, website, or automated text and email alerts. Here’s how GPS tracking devices can add value for your customers.

Quickly Locate and Remotely Disable a Stolen Vehicle

Car theft can be devastating, and low-income consumers are highly vulnerable. Aside from the frustration and panic caused by the theft itself, the process of filing a police report can be more than inconvenient. Low-income workers are more likely to work hourly shifts and miss out on much-needed income when their car is stolen. And while insurance may cover the costs of their loss—assuming they carry theft insurance—a high deductible can add to the hardship.

A GPS tracker allows them to know where their vehicle is at all times. With HoloTrak solutions, they can monitor their vehicle’s location and share that data with the authorities in real time in the event of a theft. Properly equipped, the car owner can even remotely immobilize the vehicle’s ignition, rendering the stolen vehicle useless to the thief. Tracker technology, then, increases the odds and speed of their vehicle recovery so they can avoid the hassles of going without—or even stop the theft before the perpetrator gets very far.

Get Notified When It’s Time for Service

Vehicle tracking technologies can monitor battery levels, mileage, and other metrics to help drivers take a proactive approach to maintenance. For instance, they can receive text messages notifying them that service is needed once they’ve reached a specific mileage. These convenient maintenance reminders can help keep cars in better shape for longer since they encourage drivers to get their vehicle serviced before they sense something is wrong.

If your dealership also provides mechanic services, you can use the alerts to encourage customers to return to your dealership’s service department for maintenance. Create custom messages that link to your website or make it easy for customers to call you and schedule service. It’s a simple, cost-effective way to automate marketing for your mechanic services and build customer loyalty in the process.

Track When a Vehicle Has Left a Designated Area

Using geo-fencing or geo-marking, trackers can notify a customer when their vehicle has left a particular area. Parents can use this feature to ensure their teen drivers don’t stray too far from home. It’s also helpful for keeping up with senior citizens or other potentially vulnerable adult drivers.

Monitor Unsafe Driving Practices

Car accidents are the second leading cause of death among teenagers. Vehicle tracking technology can monitor unsafe driving patterns so parents can coach their teens on which areas they need to improve. The trackers can monitor speed, braking, driving history, and more.

Some insurance companies offer these tracking capabilities to customers in exchange for discounted insurance rates. However, many consumers may be wary about insurance companies using the data against them. For example, people who work second and third shifts may pay higher rates because their vehicle is used more at night. Buy-here-pay-here dealerships can offer their customers an alternative way to access the benefits of GPS tracking technologies without the potential privacy concerns that come with acquiring them through their auto insurance company.

Mitigating Risk Improves Your Financial Options

The capabilities of vehicle tracking technology reduce the risk of the buy-here-pay-here model. Insurers are willing to reward dealers that invest in tracking devices because the devices reduce delinquencies and shorten recovery time for stolen vehicles. Dealers implementing vehicle tracking can negotiate lower insurance rates and more advantageous financing from banks. Those savings can, in turn, allow the dealer to offer more competitive rates to its customers and mitigate some of the high costs of today’s used car market.

In summary, vehicle tracking technology can help buy-here-pay-here dealers solve common collection and recovery challenges, mitigating risk without incurring high costs. By offering additional benefits to car buyers, the technology also boosts the value proposition of buying from a dealership that employs it.

Want to learn more about the capabilities of vehicle tracking technology for your buy-here-pay-here dealership? Let HoloTrak help you explore your options. Get in touch with us today to schedule a consultation.

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