Click to begin

We are an independent insurance agency doing business in Louisiana, Alabama, Mississippi, Arkansas, Nebraska, Ohio, West Virginia, New York and Texas. In other states we use brokers and general agents.

Our agency specializes in 2 Niche Programs: Mardi Gras Parades & Special Events (Over 40 years)

Car Dealer Programs (Over 15 Years)

Insurance Carriers we represent

Lloyds of London

Great American

Progressive

Affirmative Insurance

Let’s Talk About Car Sales

As a dealer, are

you feeling the

pinch in these

Troubled

Economic times?

U.S. Economy

Need a Bailout?

Have you ever had a slow month in sales?

What are your options?

Thinking outside the box

Bank FinancingFirst, banks are in the business of issuing loans. In a down economy, where more and more people are experiencing credit challenges, banks are tightening their lending.

Interest rates on an auto loan may not be as attractive to people with less than perfect credit.

How many banks are offering auto loans today?

What type of FICO score will qualify?

BHPH A very good option, but it does have some negatives.

The mark-up on the vehicle creates a large dealer federal/state income tax liability (even after sale of the transaction to a Related Finance Company (RFC) at a discount).

Most of the customer’s upfront cash payment goes to state sales tax.

”Related Finance Company.” To reduce the income tax liability on the “gain on sale”, typically the dealer establishes a wholly owned “Related Finance Company” to which the vehicle can be sold at a loss. However, the discount rate in the sale must reflect the true market value and cannot create a tax loss.

RTO While RTO programs offer great tax advantages they are not as safe from a compliance standpoint.

RTO programs have no federal safe harbor so the states have created a messy array of rules.

State attorney’s general often view RTO programs as “predatory” and create retroactive restrictions and penalties in response to consumer complaints.

LHPH Increased CASH FLOW!

Deferred Federal and State Income Tax Liability

No UPFRONT sales tax in most states (33 states)

Acceleration of Accounting Income

Collection of Tax-Free Security Deposits

Bankruptcy Protection

No Usury Limits

A tale of two buyers Both John and

Mike are shopping for vehicles.

Both have $1,000.00 total available cash.

Both can afford a monthly payment of around $240

John Mike

As fate would have it, they chose the same car on the same lot

John suggested to the dealer that he wanted to Buy Here Pay Here

---but--- Mike suggested to

the dealer that he wanted to know

more about Lease Here Pay Here

John chooses Traditional BHPH Financing

The car is priced at $7,200.00

+ 8.75 sales tax at 630.00

+ title and license at 44.00

For a grand total of $7,874.00

Less his available cash down payment

1,000.00

Financing the balance 36 mo @ 18% $6,874.00

His monthly payment is $284.66

Total available cash down $1,000.00

- 8.75% sales tax on $7,200.00 630.00

- title and license at 44.00

Dealer keeps only ……………………… $326.00

…after the tax man takes his $ CHUNK $

The Buy-Here-Pay Dealer gets to keep the cash down…

Mike chooses aLease Here Pay Here

The car is leased at $7,200.00

+ Sales Tax (8.75%) $630.00

Sub-total $7,830.00

Lease Here Pay Here $217.50

Insurance & Tracking Fee $8.00

= Total Monthly Lease Payment (36 mo) $225.50

Mike’s $1,000 gets divvied up too!

(4 months) Security Deposit* 950.00

Processing Fee +25.00

Detail/Delivery/Destination Fee +25.00

-Tax (8.75%) x 4 months, Title & License -114.00

Dealer keeps …………………………………….. $886.00

Because the sales tax is deferred, the dealer keeps more of the up front cash.

Let’s Recap How Much

Each Buyer Spent

John’s NOTE Mike’s Lease

The Car $7,200.00 $7,200.00

The Cash $1,000.00 $1,000.00

The Payment $ 284.66 $225.50

Interest Rate 18% 0%

Of the two, which buyer feels that he got the best deal?

Mike

…and which dealer feels that he got the best deal?

John’s NOTE

Mike’s LEASE

Down Payment Retained

$326.00 $886.00

Sales Tax Paid Up Front Deferred

Survey Says???

Both Dealers…

Make Credit Decisions

Must Verify Insurance

Must Track Payments

Deal With Business

…but let’s look at the differences

What if an unforeseen event interrupts the planned payments?

The 3rd payment is due but…John and Mike just can’t make it.

Worse yet – we can’t find them!

What will we do?

John is in John’s car and the police won’t help.

but Mike is in a stolen car!

The LHPH Dealer owns the vehicle

Let’s Recap Both Deals

Compare and Save

Buy-HerePay-Here

Lease-HerePay-Here

Usury Laws Apply YES NO

Sales Tax Up Paid Up Front YES NO

Income Tax Paid Up Front YES NO

Bankruptcy Risk YES NO

Title Signed Over to Customer

YES NO

Limited Repo Rights YES NO

Hard to “Divorce” YES NO

Pro’s and Con’s of LHPHPro’s

No UPFRONT sales tax in most states (33 states)

Collection of Tax-Free Security Deposits

Deferred Federal and State Income Tax Liability

Bankruptcy Protection

No Usury Limits

Acceleration of Accounting Income

Con’s Vicarious Liability Exposure

Lease Accounting System

Training & Compliance

What are the risks to LHPH?

1. Vicarious Liability ExposureIn some states, lessors have been held to be responsible “vicariously” (i.e., with no finding of lessor negligence or fault) for injuries caused by negligent lessees simply because the lessor owned the leased vehicle.

Solution:Lessors Contingent Insurance

We offer 2 types of Lessors Contingent Insurance:

1. Lessor Contingent Defense Insurance

2. Lessor Contingent Liability Insurance

Dealers must qualify: The lessee must carry liability limits of not less than (25/50/25)

The lessee’s insurance company must name you as Additional Insured; and the lessee’s insurance company must provide you with at least a 10-day notice of cancellation.

What are the risks to LHPH? (cont’d)

2. Separate Lease Accounting SystemLHPH programs cannot be accounted for and managed properly on BHPH accounting and data processing systems. A specialized system is required.

Software Solution:

What are the risks to LHPH? (cont’d)

4. Compliance & TrainingSince most dealership staff are not leasing experts, there must be a “technical assistance” capability to develop accurate answers to “frequently asked questions”.

All staff must be trained not to use BHPH sale and/or finance terminology because of the potential for confusing customers or violating federal and state disclosure or lease advertising rules and regulations.

Compliance & Training Solution:

BLC Associates In each industry there is one person or organization that is recognized as the principal authority. The national authority in consumer vehicle leasing is BLC Associates. Their clients include virtually every major lessor and finance company doing business in the United States.

Earn MoneyQualified Dealers can earn serious money when they start, own and operate our complete Turn-Key LHPH Program which includes Dealer Software, Insurance, Tracking, Training and Compliance.

As a bonus we show qualified dealers how to Make Money with our Point of Sale Insurance. This is a brand new program launched this year.

Customer Pays for

Car Loan

Maintenance/Repairs

Insurance

Why not collect the insurance payment at the same time as the car payment and earn additional income?

Point of Sale Insurance

Now you can with Point of Sale – Blanket Collateral Protection Insurance (CPI) – Self Insured Program with Great American.

Here’s how it works…….

Dealer opens a CPI Policy and sets a fixed monthly premium to charge each customer for comprehensive & collision insurance and builds this into the price of the car.

No underwriting required.

70% of the money is used to pay all comp & coll claims by Great American from this account.

Dealer also opens a Blanket Policy which allows him to file supplemental claims for coverage such as:

•Repo reimbursement - $500

•Repo storage reimbursement - $500

•Non-payment of comp/coll premium – up to $2000

•Insufficient insurance coverage (GAP Plus) – up to $2,500

Example of Premium$100 per month paid by the customer to the

dealer. This can be paid by the customer

weekly, bi-weekly or monthly. Hub Financial /

Great American keep $30 and the remaining

$70 goes into the account to pay both single

interest and blanket claims to the dealer.

Web-Based System handles

Enrollments Claims Accounting Reports

Dealer receives his own unique login name and password. This web-based system is very easy to use. This system handles everything…

Prints CertificatesFile ClaimsBilling & StatementsReporting

What we do for you… Open Lessor Contingent Policy with

Open Blanket CPI Policy with

Set-Up LHPH Turn-Key Program incl. 5 Year Cash Flow Proforma, Worksheets & Manual with BLC Associates

Arrange DMS System with Constellation Auto

Dealers will…

Make Money Save Money Sell More Cars

Do you definitely see where you and your dealership will use and benefit from our Programs?

To complete the one page set-up form and get started today, contact:

Arceri & Associates, Inc. @ 800-242-6393