“Repo” means the car was taken back by the lender because payments weren’t made. Dealers usually have to sell these with extra caution and often at a lower price to move them.
“Tax season” is the time of year when people get their tax refunds. That often affects how many cars dealerships sell, because more buyers have extra money to spend.
When they say “performance,” they mean how well the dealership did—like how many cars they sold and how good the deals were. They’re about to compare what they saw versus other dealers.
“Tax max program” is the dealer’s program that helps customers file taxes. The goal is usually to bring customers in and help them use their refund toward buying a car.
“Outside filers” are customers who get their taxes done somewhere else, not through the dealer’s program. That can make it harder for the dealer to steer the refund toward their purchase.
The speaker is saying that in the past, most people who got tax refunds ended up spending that money at used-car dealerships. Other businesses later started competing for that same money.
An “affordability issue” means people feel like buying a car is harder financially right now. That can make them more hesitant to commit their refund money.
They’re talking about tax refunds—money people get back when they file their taxes. The key question is whether that money goes toward buying a car (like a down payment) or toward other bills and savings.
A voluntary surrender is when someone turns the car back in to the lender on purpose. It usually means they’re behind or can’t afford the payments anymore.
Negative equity means the vehicle is worth less than the amount still owed on the loan. This makes it harder for customers to trade out of a bad situation and increases the likelihood of surrender or default.
GAP helps if your car is totaled and the insurance payout doesn’t cover the full amount you still owe. It fills the “gap” so you’re not stuck paying the difference.
“Payment to income” means comparing the car payment to how much money the person makes. If the payment is a small enough share of their income, it can be considered more affordable.
Buy-here-pay-here is when the dealership both sells the car and collects the payments. The episode says other lenders are starting to offer similar financing, so BHPH dealers face more competition.
“60 months” means the loan is paid off over five years. They’re saying some lenders are willing to go that long, which can make the monthly payment smaller.
These are ways lenders try to help when payments are tough—either by changing the loan (refi) or delaying payments (deferment). The point here is that there’s a limit to how much you can do before it hurts results.
“Metrics” are the numbers companies track to see how well things are going. In this case, it’s about how risky the loans are and whether customers are staying current.
“Aged inventory” is inventory that has been sitting unsold for a while, commonly measured in days. The longer a car sits, the harder it can be to sell at strong margins due to customer perception and market shifts.
“Auction price” is what a vehicle is expected to bring in an auction environment, which can be lower than retail but faster to convert into cash. Dealers compare auction outcomes versus holding for retail to decide the best path to sell.
A “haircut” is a reduction from the expected value—here, accepting less than wholesale/expected proceeds to sell quickly. It’s common in wholesale/auction scenarios where speed and certainty matter.
It means how much money a customer will likely bring you over the years, not just from one sale. If you treat them fairly and they trust you, they’re more likely to come back for service and their next car.
A line of credit is a borrowing account you can pull from when you need money. The point is: don’t spend the tax-season cash on fun stuff if you borrowed that money to stock up.
“Advertising spend” is the budget a dealership allocates to marketing channels to generate leads. The speaker checks lead counts week over week and adjusts spend when performance drops, implying a feedback loop between marketing and sales pipeline.
“Lead count” is the number of potential customer inquiries the dealership receives (often from ads, calls, forms, etc.). Tracking it week over week helps dealers decide whether marketing is working and whether to adjust budgets.
It means tweaking your ad settings and spending to get better results. Instead of keeping the same ads, you adjust them based on what’s happening.
LIVE
You should have started dropping prices already.
People that aren't looking at the market right,
every day you need to change price.
If you're not getting leads on a car, Jeff,
drop the price.
Drop the price until you get leads.
I know that sounds nuts,
but two weeks ago we had a bunch of
repo Honda Accord sitting on the lot,
and they weren't the nicest in the world.
No, they were not.
And we had them priced at around $9,500, right?
So I had ACB come out,
and they are not a sponsor,
just saying had them come out.
They listed all of them.
And they have this thing that tells you the
guarantee offer, right?
So we looked at the guarantee offer,
then we looked at their projected offer.
And I said, alright guys,
we can run all these,
and they're guaranteed to bring this amount of money.
I said, or we can take the price
to $1,000 above what ACB expects
the whole sale to be.
Yeah, that makes sense.
You know how many we got.
You know how many we got left.
How many?
One.
Hello, and welcome to the IndePen and Deler podcast.
Luke, what's going on man?
You know, just hanging out.
What?
Everything is back to normal now.
Nothing super exciting going on.
You didn't have big tax time blow out.
and you're recovering like it came in and went and I feel like I blinked and I missed it well
it is why we are recording this it's late March and tax season I will officially declare tax season
of 2026 done yeah you brought you brought bill out he didn't see a shadow and it was
oh I love that pasta tiny bill I like it bugs Tony bill did not see his shadow
and tax season came and went like a lamb yeah I'll tell you one of those tax seasons where
there's a lot of people crying Jeff and uh you know I I don't know what to say it's uh
there was money out there to be had if you got it then you were doing something right
if you had a marginal year then you did something marginally right
probably you didn't do anything right but and if you had a bad year I can't tell you
you were not prepared if you had a bad year yeah you obviously were so let's talk about that let's
talk about a little bit of how the performance was what you saw from your dealership and the ones
you talked to I'll talk about mine and how ours performed some of the theory behind that and
then let's talk about what next because that's the other issue that we got to deal with is like okay
and now what so I can tell you from my standpoint just looking at my numbers I was off half I'm 50%
off of what I did last year total filings that I did in-house with my tax max program and total
filing returns now that doesn't account for you know I'm not looking at down payment dollars I could
probably pull that number and see if I did just as large a cash down payments as I did the year
before I don't have that number in front of me but as far as my actual in-house filings
it was less exciting than last year interesting um did you promote tax max the same way this
year compared to last year I feel like I did and by the way this is not a tax max episode we're
using this to get data so it would probably fight me if I if I said anything otherwise but
it we I think we were as bought in this year as we've been any year and I say the word think
because I don't know that my sales team was fully trained to ask every single customer every
single time about their tax return I think they were from what I heard and the conversations I
reviewed in Neo things like that so I think we were just as much bought in of trying to get more
money from their down payment as we've ever been it just seemed like a lot of them were very guarded
about it they didn't want to file with us they didn't want to use their down payment maybe they
filed elsewhere you know we had a couple customers like that that were still waiting for their returns
to come in so we have a couple deferred downs from outside filers that were still waiting on
so it just seemed like everyone was much more maybe protective of their tax return like maybe
was already committed elsewhere all right that happens every year I think you know if you go
back to the early times of tax season you know it was used car dealers got a majority of tax checks
because it's such a large purchase but then you started seeing furniture stores move into the
space right then you started seeing red dome people move into the space of really attacking
tax returns so I believe that there's definitely other industries that have learned to take tax
money uh and they're good at it right and so money goes elsewhere but we really do have an
affordability issue um in the in the economy so you brought this up on our prep here we're talking
about were they using that money to pay down debt and so if they figured if they came to you and they
said okay I'm gonna file with you that you would take it all um and I think even bill preaches us
that it's not a good idea to take as much as you can you need to take you need to take a chunk
don't get me wrong but people people that get these big tax returns use this as a savings account
and um and maybe they're just getting smarter that they're paying down some debt maybe
are getting called up on some things and then putting down an average down payment maybe I don't
know yeah I mean that would be my anecdotal evidence would just to say I think if I combine
that with the amount of voluntary surrenders that I've had in the last 60 days I would just say
our customers are stressed and not a lot of them wanted to go out and take on a car payment right
now so maybe they needed to upgrade their car or replace one but they weren't grabbing their tax
return and running out saying here's my opportunity to get into a $400 payment because I just don't
want one I'm gonna make what I have work I'm gonna keep driving my cousin's car or catching rides
I'm not quite ready to take on a payment and so that would and so I look at my voluntary
surrenders okay why do I feel like those have spiked because people are looking to unload
maybe a car that's too expensive a payment that's too expensive a second vehicle uh
they see that they're completely upside down negative equity-wise because I've seen some
pretty large severities on my charge offs the last two months you know these cars that
just I've taken huge severity loss on them because the markets reset coming out of COVID
and the post-COVID time so yeah so uh before we dive into that I'm gonna I'm gonna plug myself
we're having a elections bootcamp May in Atlanta near the Atlanta airport go to godwinconsultinggroup.com
register for that because we're gonna walk through a lot of these things that are that are coming
up right why are we why are we getting these turn-ins why why are people not paying how can
we get in to pay better so make sure godwinconsultinggroup.com you get there but anyway it's May 14 I believe
turn-ins and repos in February across my dealers that that I get to see their numbers
um was up 15 compared to last year Jeff
voluntary surrenders um out of dealers I get to see their groups has spiked like I've never seen
in February yeah and has continued into March typically you see voluntary surrenders typically
I did and typically the people in in groups I've been in for years have seen voluntary
surrenders spike in June or July sometimes they bleed into August and those come from
bad underwriting deals maybe you did during tax season or people got into the big pavement during
tax season then they they couldn't get out of it what we have seen this year is a voluntary
surrender that and sometimes you would see it in January too because people knew their
tax mate was coming they were going to get a new car so that's when I turned it in but this year
February has been a big voluntary surrender month and March is becoming a big voluntary
surrender month month so I have a theory Jeff and it goes back to the affordability idea we
as dealers have trained ourselves to demand a higher car payment on a lesser product okay
before COVID I know people out there have heard me say this many times but before COVID
we were our average car payment was 435 a month okay and at that point people were asking for 300
payments right and I remember it's myself people and that's just six years ago okay
myself we were going oh we just need that 300 all-payment we need that 300 all-payment
well 300 all-payments are tough right but I don't even know if they exist well I do know
they exist I'll tell you why in a minute but we have gotten up to 550 a month and I'm telling you
that is hurting by your paying your customers way more than you think it is hey sorry to break in
real quick but make sure you guys know about Buckeye long time awesome sponsor the podcast
and who I use for all my reinsurance products I can't thank them enough for teaching me so much
about reinsurance over the years and coming up with new products and new ways to get my portfolio
secured my customers have options of warranties and service contracts gap I think it's just been
great Jeff it's absolutely been a great way for me to build wealth put away some money so if you are
a buy here pay here lease here pay here or retail dealer it works for all dealers you can set up a
reinsurance company you can insure your own stop giving money to those third-party providers that
aren't going to cover your stuff anyways keep it in-house call the guys and girls over at Buckeye
risk services and get set up ASAP yeah what we I guess I don't see it's the math it's just literally
the math the payment is the math it's not like I mean I'm not picking a number out of the air
because I want them to pay $500 a month I'm just telling you the math math that's what day it is
the math does math let me tell you from doing outside financing what I'm seeing okay and
people out there might know we we're back into the retail business and we're into the retail
business not back into it but the approvals I see coming just today I just want a deal for instance
and because we're buying a 14 Tahoe $7,000 now and yet
and we gave him two options and the option was 24 months at 512 with an in-house type program right
or this is an outside lender who's a very nationally known lender gave them 48 months at 300 months
yeah so why wouldn't you do that why wouldn't you do that what I'm saying is there are you
putting them on a 24 month loan to get it done quick he put seven grand down I don't care
well that sounds self-inflicted well if he turns it in it self-inflicted but the guy makes plenty
of money so it's 500 a month payment it's not a big deal right so you said you have him in a
reasonable payment to income oh gosh yeah he's he's okay like 10 at 500 so what's your point then
my point is this outside lenders are doing the same buy here pay here deals okay they're doing
they're doing the deals they have an extended term and so they're competing against buy here pay here
dealers essentially for the same customer in the same end endured however they will extend loans
we've seen terms Jeff at 60 months on a deal that I would have never gone over over 48 months right
and the payment instead of being 550 a month has gotten to 425 a month or maybe even 378 a month
there's a big difference in what I am seeing with outside lenders compared to what we were
doing by your pay here and the customer really is concerned about that $100 a month payment
it's it's a big difference and you can show them all day this is four years compared to six years
they don't care they worry about this month yeah so you're the base argument is outside lenders
are willing to do longer terms there we go and you're saying you're not willing to do longer
terms because I'm saying I'm saying that buy here pin buy here pay here industry as a whole
is not willing to do longer terms I don't disagree with that I think that shorter terms
are better for the customer in the long run and better for your portfolio okay but you're going
to get some turn ins because the payment isn't manageable and you didn't communicate with them
before the turn in that you could work with them on the payment because you wrapped homeboy up at
24 months he said sure I can I fight $500 it's totally within my budget but then he comes back
in 12 months and realizes that he can't afford 500 anymore and wants to turn the car in then you've
got to make a decision then you gotta make it yes and what I've advised some of my dealers that are
on our collections platform and what we're doing for dealers I've advised them you need to be able
to refund free refile that customer if you if you need to and it's saving it's saving accounts
and I'm not saying right now that you need to go out there and do that but in certain instances
when you have customers that that can pay 300 a month or 400 a month that they've been in this car
for for 18 months and they're about to turn it in you need to try to save that deal somehow
and lowering their payment might be the only way to do it absolutely I think it's it's completely
smart you start with a high payment because they're excited and they can say they can afford it
and then when they come back to you and say they can't afford it then you say okay great
Mr. Customer no problem we'll add 12 more 12 more months onto that loan and get your payment
dropped down by a hundred bucks a month that's right if the loan is already performable now you
have room to do it and if they're still working and that's right that's right I don't have that hard
data but what I think has happened with my customers that are doing voluntary surrenders is
they are losing hours they're losing their second job yeah I agree and and now all of a sudden yeah
what was their income now has struggled they don't need that second car they're gonna make
do with one car in the family because wife is only working a part-time job now not a full-time job
so she can get dropped off so that's what I feel like I'm seeing is just that overall tightening
of everyone's budgets maybe because the got tight and now when you stick you know four
dollar gallon gas on top of that there's an undercurrent in in the economy that has been there
for a little bit and we've talked about it before but it's it's there and I don't know what to do
about it I know that you your number one thing is to to communicate communicate to your customers
like nobody's business we're gonna we're still gonna get the problem where the customer will not
communicate I can show you I can show you probably six repos sitting in my repo fence right now of
customers that just refuse to communicate to us and and the cars are in great shape and you're
like man if y'all are just talk to us we could have helped you here but sometimes they don't
yeah yeah for whoever's fault it is their fault maybe they got the vibe from your
collector that they weren't going to get worked with whatever the case may be but that's what
sets us apart from the big lenders and the regional lenders it's just the ability to be flexible right
when we lose that uh that's when the customers think they have no option but just drop the keys
and run so that's the only thing that's going to set us apart from those guys who will do 48
months on the turn yeah that set and if you don't make that payment that third party lender in
Los Angeles they're not going to make a payment arrangement they're not going to make a they're
not going to refi your customer to keep them in the car that's right they may let you go 90 days
past due but at that 90 days they're going to repossess you right so we do we do need to communicate
and we need to make sure that our our collectors are going above and beyond and and they hey
this may be crazy but your delinquency can be too low right yeah and if it's too low you're
going to get some charge off so there's a happy immediate there's a happy medium in there where
your collector can be too tough yeah and get too happy with the refis and the deferments and all
that kind of stuff so we do have a lot yeah back in all these metrics and making sure you're keeping
an eye on everything but for me right now my delinquency is actually at an all-time low
so my collector is doing great I don't I don't think that's the overall trend from everybody
right I mean I think no nationally delinquency tick up a bit yeah I see delinquency year over
year up 1.2 percent yeah and that is uh that's a big deal yeah everyone's got a charge off increase
so not only your customers more labor your charge offs are also up and uh when the cars get back in
they are really rough yeah back to that severity thing my severity has been a big one so I mean
I didn't have that many repos last month but the total dollar amount was still hefty because each
individual loss was you know four five grand six grand on some of them you know it's it's
unfortunate you know we're at the we're like three years out from in cars we're the highest
you know what I mean yeah and maybe three maybe four but I think it's probably three years somewhere
there so we're getting those three year repos back right now I mean you you would say man they made
it three years why don't they make it to the end well some people just don't and I can't tell you why
but the amount that I see that these people still owed on those cars that they bought then with only
a year left I'm like holy cow that is that is a large number yeah yeah um let's wrap this up with
what now because whether you're about here pay here or if you're a retail dealer and you made it
through this and you were hoping for a big tax time and you didn't what happens now for guys like me
who maybe I'm sitting a little heavy on inventory still because I didn't have the sales numbers I
thought I would I geared up well I had plenty of cars I thought I had the right price point but for
some reason the customers just didn't come in so now I'm sitting on some you know my goodbye here
pay here stuff I'm going to let that stuff ride I'm sure I'll sell it eventually not too worried
about the you know under eight thousand dollar under ten thousand dollar type cars for me but my
over ten thousand dollar cars when do I say okay they are worth more now than they ever will be
because now tax time's over we're going to go to a normal depreciation of wholesale values
when you say okay I just got to get out of this thing you should have started dropping prices
already um people who are not looking at the market people that aren't looking at the market right
every day you need to change price if you're not getting leads on a car jeff drop the price
drop the price until you get leads I know that sounds nuts but two weeks ago we had a bunch
of repo Honda Accord sitting on a lot and they weren't the nicest in the world they were not
and we had them priced at around ninety five hundred dollars right so I had ACB come out and
they are not a sponsor just saying had them come out they they listed all of them and they have
this thing that tells you the guarantee offer right so we looked at the guarantee offer then
we looked at their projected offer and I said all right guys we can run all these and they're
guaranteed to bring this amount of money I said or we can take the price to a thousand
dollars above what ACB expects the wholesale to be yeah that makes sense you know how many we
got left how many one yeah so you took it down to a low but reasonable markup in order to
liquidate some aged inventory how old did you say they were average aged um they were 60 days
probably okay so not crazy for the world we live in no but but but for me we wanted to
liquidate these repos in cash sales to you know just to generate some some excitement but I'm
telling you yeah it's amazing what adjusting price will do to leads when we got here Monday
morning we did this Friday afternoon um last week when we got here Monday morning I think we had
like a hundred cargo release on on those five or six Honda Accords I mean it was like it was
like the flood gate opened right we had them cool we had people in the showroom we won't
do so we won't now it was nuts and and you know we got them sold and that's sometimes what it takes
is no need to to liquidate that car in auction price it right get it gone hey guys real quick to
jump in and make sure you know about a new exciting sponsor here a supporter of the podcast and a
supporter of all independent activities to be honest with you uh Adiron GPS Adiron GPS they
have really really great products so I've used them before they're wonderful they don't break if
you install them right right all that good stuff but like you said a big sponsor of the industry
with Buy Here Pay Here United and they're at every conference Jeff so make sure you're using the
best possible GPS on the market and that's Adiron yep give them a call go to our website for more
information yeah that's a that's a really good point of when do you say hey this thing is a
wholesale value now I need to turn it into cash within 72 hours so I'm willing to take the haircut
that to me just I don't I've never wrapped my brain around that I've never wholesaled or auctioned
a car that was worth the darn so I don't get it but I get that retail dealers like that's something
they do I don't understand it's too hard it's too hard to buy and recon a car to take it back to the
Joe Lascobo yeah Joe Lascobo told us this years ago and in one of my first 20 groups
and he was talking about the lifetime value of a customer you know to wrap this up let's talk
about the lifetime value of the customer if I sell a car undervalue to a customer you think
they're gonna go tell their friends about it yeah as long as it's square right and we're talking
about a retail car a retail car they're gonna probably go tell their friends hey I bought it
and they may even come get the car serviced at my service department the next time go ahead
then you may have even ripped their trade in I may rip their trade because you gave them a killer
deal on yours it's only fair that's right um they they may come by their next car for me and their
next far right but the life of the customer back then and this was back in 2015 or maybe earlier
than that was like $252,000 to a new party the lifetime value of that customer so so think about
that when you start pricing price of cars but but what's next reduce your inventory now you've
got lean months coming up especially about your pay here uh you know dealers retail dealers sometimes
you still get it you know you still have a little bit of time here uh it used to be a rule liquid
day before july 4th because after that it was gone but I think that's kind of changed a little bit
tighten up expenses things can get out of hand during tax season you uh you got all this cash coming
in um and you you're not as tight as you should be so you need to tighten up on your expenses
you need to pay down those credit lines that you may have tapped to to get the inventory for
tax season don't let that money sit in your bank it's it's not getting you any money there um yeah
that is a good point because if it's sitting there you're gonna spend it you're gonna forget the
you tapped your line of credit for a couple hundred grand also and you got a couple hundred
grand to your account you go and buy a boat thinking you made a bunch of tax money don't do that um
do that and revisit your advertising spend too you know I had to go back and I looked at my lead
count for last week and it dropped you know it's dropped week over week for the last four weeks
and I said well man well that means I gotta go revisit my spend because my spend isn't getting
me what it got me four weeks ago so why am I still why why do I still have those budgets so I went in
adjusted some budgets it and we we talked about this in the money minute that's coming out
in sometime in April but you know it's fine tune your advertising spend right now and it's a time
to do it because you get real numbers right now uh when you're spending money on advertising
you're not going to get inflated free tax season and tax season leads you're going to get actual
real where people shopping and why are they shopping so make sure you fine tune that advertising
budget and I was talking to a dealer the other day two dealers actually and they went with this new
advertising firm and they have they have too many leads jeff do you think that's possible
yeah probably depends on the quality but yeah I mean we're talking about people getting
700 leads a month for for people that are used to selling 30 cars 700 leads floods everybody they
can't get the business done so make sure leads are not all leads are not built the safe so make
sure you're fine to get the quality leads that you need to sell sell the cars you need to sell
absolutely it's a good reminder and it's a good time here to do it because we are going into
you know the spring time like you said we'll still have some buying stuff going into summer
driving and you know summer vacation things like that but at that point then you go into the dog
days of summer yeah yeah I've got I've got probably 10 units that I need to have gone in the next
30 days because I don't want to be sitting on them you know into summer time or I'm really
going to take it on the chin so so yeah that's what I'm going to do right now man I'm going to go
reprice some of these suckers getting gone before the end of the month so I was talking to Cody
today before I left out of the office and I said uh what's sitting do we have any leads on these
cars he said we don't have it nobody's called called us about these three cars I said drop the
price drop it a thousand dollars drop it a thousand dollars until somebody starts calling
yeah and he's like okay yeah I love the end of the year thing or the end of the month sorry I say
right now hey this is an end of the month special I'm going to drop it down and be super aggressive
for the next five days to the end of March yeah which this is going to airway after that
but I love my salesman know this expires at the end of the month and on the first of next month
I will reprice all of these back to market I will reprice them all back up you you can raise the
price you can you can raise the price that's just experiment yeah yeah hey if this thing's
gone by two o'clock on Saturday here's the price if not at two oh one if you don't have a deposit
in my hand it goes back to this number I love it anyways I'm going to mess around with some of
that get some of these high dollars out get that money back in the bank that's for sure yeah go
all right buddy talk you next week see you
About this episode
Dealers recap tax season 2026 as a mixed bag: filings were down for some, while stressed customers leaned toward voluntary surrenders and turn-ins. The hosts compare notes on why—affordability pressure, tighter budgets, and negative equity—plus how delinquency and charge-off severities are rising as older used inventory returns. A big takeaway is pricing agility: drop prices to generate leads, then reprice back up if inventory moves. They also stress flexible collections/communication and adjusting advertising spend based on real lead quality.
In this episode of the Independent Dealer Podcast, Jeff Watson and Luke Godwin break down the reality of tax season 2026 — what dealers actually saw, why customers didn't show up the way they expected, and what you need to do right now before the slow season sets in. From voluntary surrenders and charge-off severity to aged inventory strategy and ad spend adjustments, this is the post-tax debrief every independent dealer needs.What You'll Learn:Why tax season 2026 underperformed for many BHPH dealers — and what it signals about customer affordabilityHow outside lenders are competing for your buy here pay here customers with longer loan termsWhen and how to refinance or restructure a customer's payment to save an account before it turns into a repoThe right way to reprice aged inventory to generate leads fast without running to the auctionHow to tighten expenses, pay down credit lines, and fine-tune your ad spend coming out of tax seasonIf you're a buy here pay here or independent dealer trying to figure out your next move after a softer-than-expected tax season, this episode is your playbook.
