Wheels of Fortune
A little-known corner of the used car business is thriving in a sour economy.
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Sign, drive, default, repossess and resell — that’s the game at Buy Here Pay Here dealerships.
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Private equity firms are investing in chains of used-car lots, and auto loans are being packaged into securities much like subprime mortgages. They’re attracted by the industry’s average profit of 38% for each car sold
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Few programs are available to help low-income workers get behind the wheel.
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Repossessing and re-selling cars is a distinctive feature of the Buy Here Pay Here industry. Neil’s Finance Plaza of Kansas City, Mo., has sold more than 800 cars three times or more each since 2006. One of them, a four-door 2003 Kia Optima, changed hands eight times in less than three years. Here is its trail of ownership:
