Caesar, a 20-year buy here pay here veteran from lower Texas, walks through how he pivoted from a 15-year refrigeration career into car sales—starting in the worst possible time (2007–08). He explains why his early bank was skeptical, how he got a $250k recourse-style line by redesigning the structure around over-collateralized “micro loans,” and how that cash-flow engine grew to roughly $10M principal. Later, he shares a data-driven decision to close a second location after realizing it was cannibalizing his main store. He also covers reinsurance (CPI) after Hurricane Harvey, tightening underwriting to reduce repos, and the ongoing math behind gross, repos, and profitability.
In this episode of the Independent Dealer Podcast, Jeff Watson and Luke Godwin sit down with Cesar Torres of Lofi Motors in Corpus Christi, TX, for a candid look at what it really takes to build a buy here pay here dealership from the ground up. Cesar shares how he stumbled into the car business, how he convinced a local bank to restructure their lending model — and how that $250,000 line of credit eventually grew to $3.5 million. From carving out a sub-$15K niche to leveraging reinsurance to fund 50 rental properties, this is a masterclass in independent dealer growth.
What You'll Learn:
-How Cesar got into the car business with no experience — and why the bank turning him down was the best thing that ever happened to him
-The microloan banking strategy that turned a $250K line of credit into $3.5M in portfolio funding
-Why Cesar closed his second location — and how one store ended up outselling two
-How to find your niche market and stop competing with CarMax and franchise dealers
-The reinsurance strategy that funded his entire real estate portfolio
-What 20 years in BHPH has taught him about gross, underwriting, and knowing your numbers
If you're a buy here pay here or independent dealer looking to scale your portfolio, tighten your underwriting, or figure out when to grow and when to consolidate, this episode is packed with real-world experience you won't find in a textbook.
Support the businesses that support the podcast:
Buckeye Risk Services - Reinsurance and wealth strategies for independent dealers.
"We're gonna study collections as a whole. We're gonna learn to role play with our staff. We're gonna learn things like recency, delinquency,"
“Collections” is the process of getting paid when someone falls behind. It usually involves calls, reminders, and working out ways to catch up.
“Collections” refers to the process of following up on overdue payments and working to recover money owed. The episode frames collections as something to study “as a whole,” implying coordination between data, staff training, and customer communication.
"We're gonna learn things like recency, delinquency, and how better can we prepare our collectors to collect the money that we lend out?"
“Delinquency” means the customer is late on their payments. The later someone is, the more urgent and structured the dealership’s follow-up usually becomes.
“Delinquency” means a borrower is behind on payments. In BHPH operations, delinquency status is central to collections workflows—determining who gets contacted, how urgently, and what recovery steps are appropriate.
"but when it comes to buy here, pay here, [154.0s] there's not many better if there's any better."
“Buy here, pay here” means the car lot sells you the car and also handles the payments. Instead of a bank financing it, the dealership is the one you pay.
“Buy here, pay here” (often shortened to BHPH) is a dealership model where the dealer sells the car and also finances the purchase directly. The dealer typically manages collections and repossession risk in-house rather than sending the loan to a bank.
"I gave him the book of business. We had a book of business and I said, hey, you know what, well, let's back up a little bit."
A “book of business” means the customers and leads you already have. If you’ve built relationships over time, those people are more likely to buy again or send others.
A “book of business” is the set of customers, leads, and repeat buyers a person or company has built over time. In auto sales, it can include prior buyers, referral sources, and ongoing relationships that drive sales.
"he was a curb stoner and that term is basically a guy who goes on Craigslist or somewhere or, somebody's got an old car in their yard, offers to buy it and cleans it up and puts it on the road and sells it."
A “curb stoner” is someone who spots cars people have sitting around (like from Craigslist), fixes them up enough to drive, and then sells them. Think of it like a small-time car reseller.
“Curb stoner” is a dealer-lingo term for someone who finds cars from private owners—often via listings like Craigslist—then cleans them up, gets them road-ready, and sells them. It’s essentially a small-scale, informal vehicle flipper/sourcing person.
"he was a curb stoner and that term is basically a guy who goes on Craigslist or somewhere or, somebody's got an old car in their yard,"
They mention Craigslist because it’s a website where people list cars they want to sell. Some car resellers use it to find cheap vehicles from private owners.
Craigslist is referenced as a common place where informal car buyers/sellers find vehicles from private yards. In dealer operations, it’s often part of the sourcing pipeline for used cars—especially for “curb stoner” style acquisition.
"[542.4s] I'll get the license.
[545.1s] I'll get the building, a biasing inventory, you know,
[548.3s] I'll be the owner, but we'll split the proceeds,"
Inventory is just the cars the dealership has available to sell. If you don’t have the right cars (or you can’t sell them fast enough), the business doesn’t bring in money.
“Inventory” here means the cars the dealer has on hand to sell. In a BHPH model, inventory selection and turnover matter because the dealer’s cash flow depends on selling vehicles and then collecting payments.
"[572.6s] cause I wanted to do everything, you know,
[575.7s] we needed accounting, we needed to make sure that the,
[577.8s] you know, whatever we spent was, you know, cataloged"
Accounting is keeping track of the money—what came in and what was spent. For a car lot, it helps you know what deals are actually making money and keeps the paperwork organized.
“Accounting” refers to tracking income, expenses, and deal-related costs in a way that can be documented and reported. For a BHPH dealer, good accounting is critical for knowing true profitability per deal and for managing compliance and audits.
"In between, you know, being on call, you know, if somebody would call and run and make a call or whatever, fix something and come back."
“On call” means you’re expected to be reachable if something goes wrong. In a car business, that could be a repair request or a problem that needs fixing quickly.
Being “on call” means the person is available to respond to urgent issues outside normal hours. For a dealership or reconditioning operation, this often reflects the reality of handling breakdowns, customer issues, or quick repairs to keep sales and service flowing.
"[690.4s] And I'd say it was like somewhere in 2011,
[695.4s] which is a terrible idea.
[696.8s] So just to show you that I knew nothing about the car business
[700.5s] or the finance or the banking or anything"
The transcript highlights “finance or the banking” as areas the speaker didn’t understand when they entered the car business. In dealer-lending models like Buy Here Pay Here, understanding underwriting, payment performance, and collections is crucial because the dealer is exposed to customer credit risk. This mention underscores why dealer finance knowledge matters as much as selling cars.
"Old school banks would give somebody a line of credit and say, hey, go, go get some clients for me, finance them. We're going to finance them under the company or under the, you know, the bank name"
A line of credit is like a credit limit you can tap into when you need money, then pay back. The lender decides the limit and can change it based on how things go.
A line of credit is a revolving borrowing limit that can be drawn as needed, then repaid, with the available balance replenishing over time. In dealer financing partnerships, a line of credit is often used to fund customer loans or inventory-related financing.
"This is how our program works and this is line of credit. We'll renew every year, depending on how your loans perform and so on and so forth."
The lender may keep funding you, but they review it each year. If the customers you financed default, they can tighten the terms or stop renewing the credit.
This describes performance-based renewal of dealer funding: the lender continues or adjusts the credit facility based on how prior financed loans performed. It’s a key risk-management lever because defaults can directly affect future funding availability.
"My customers have options of warranties and service contracts gap. I think it's just been great, Jeff."
GAP coverage helps if your car is totaled and the insurance payout doesn’t cover what you still owe. It pays the “gap” between the two amounts.
GAP (Guaranteed Asset Protection) coverage helps pay the difference between what you owe on the loan/lease and the car’s actual cash value if the vehicle is totaled. It’s especially relevant for high-depreciation vehicles and low-down-payment deals.
"...they have a borrowing basis and they pay interest and it's basically interest only. And so there's really no way of reducing principal, right?"
Interest-only payments mean you’re paying the cost of borrowing, but not paying down the loan itself. So the balance stays about the same.
“Interest only” means the borrower pays only the interest cost each period, not the principal balance. That keeps the debt level from shrinking, which affects cash flow and long-term financing cost.
"...there's really no way of reducing principal, right? So when I sold my bank, so,"
Principal is the actual money you borrowed. Interest is what you pay on top of that—so paying principal helps the loan shrink.
Principal is the original amount borrowed (the “balance” of the loan) as opposed to interest, which is the cost of borrowing. The speaker contrasts principal reduction versus interest-only structures.
"...they had a floor plank company in the bank, right? Where you could floor cars and, you know, they would give you an advance on the car."
Floor plan financing is how dealers fund cars sitting on the lot. The bank lends money against those cars, and when you sell the car, you pay the loan back.
A “floor plan” (often described as a floor plank in transcripts) is inventory financing where a lender advances money against vehicles on the dealer’s lot. The dealer typically pays interest while the car sits as inventory, and the loan is repaid when the vehicle is sold.
"...I built, you know, cash flow. And he sat there and looked at me for a minute and just, you know, thought about it..."
Cash flow is basically whether the business has enough money coming in to cover what it owes. Better loan structure can help the business keep more money available.
Cash flow is the movement of money in and out of the business over time. The speaker’s point is that restructuring financing to pay principal (not just interest) improves the dealer’s cash flow cycle.
"...the loan value of the car is five grand. I said, you're, you're over collateralized already."
Over-collateralized means the car is worth more than the loan amount. That gives the bank a safety cushion if something goes wrong.
Over-collateralized means the collateral value exceeds the loan amount, giving the lender extra protection. The speaker argues the car’s loan value is already covered, making the bank more comfortable with the proposed structure.
"...it was like 14%, which is really good... some of the rates are a lot higher... they said, Hey, we'll give you eight or eight and a half..."
The interest rate is the extra cost the bank charges for letting you borrow money. A lower rate means borrowing costs less, which can make it easier to profit.
Interest rate is the cost of borrowing money, usually expressed as a percentage per year. The speaker compares 14% financing to other banks offering 8% to 8.5%, and explains how rate differences affect profitability.
"...they have much deeper buying power, they have much better financing, they have much better warranties than you do."
Financing refers to how the dealer structures the loan terms and works with lenders to get customers approved. In BHPH, financing terms (down payment, term length, and payment amount) strongly influence default rates and overall business stability.
"...they have much deeper buying power, they have much better financing, they have much better warranties than you do."
Warranties are used as a competitive advantage—larger dealers can offer better warranty coverage, which reduces buyer risk and can justify higher prices. For smaller BHPH operators, limited warranty options can make head-to-head competition harder.
"...taking a thousand or $2,000 down and putting them in a seven year note..."
A down payment is money you pay upfront when you buy the car. It reduces how much you have to borrow and can make the loan less risky.
A down payment is the upfront amount a buyer pays before financing the rest of the vehicle price. In BHPH, down payments can reduce the amount financed and may lower default risk by showing buyer commitment.
"So seven, eight, you know, six, seven of the deals that we were selling at the, at the, at the north location originated from zip codes in the area where we had our principal store."
They looked at what neighborhoods customers were coming from. They found that the second location was mostly serving the same area as the first one.
Using zip codes is a common way to analyze where customers come from and which areas generate loan originations. Here, the dealer found most deals from the “north” location actually came from the same zip-code area as the main store.
"And so we said, we're going to take a, you know, we're going to take an opportunity to try and see if we could consolidate the one store and see if we could sell more. And so last year in September, you know, we shut down our north location..."
“Consolidating” means closing one location and focusing operations on a single site. The goal is often to concentrate inventory, staffing, and management attention to improve throughput and sales efficiency.
"You had the facts that said, this doesn't make a lot of sense. Maybe our stores [1850.3s] are too close together at this point, because we're just stealing traffic from the other store."
If two dealerships are near each other, they can end up competing for the same people. That can make the second one less profitable than expected.
This refers to dealership location overlap, where two stores compete for the same nearby customers. When stores are close enough, the second location may not generate enough incremental demand to justify its costs.
"And how do you, how do you fund that? How do you justify the return on investment? [1924.5s] Because sometimes real estate's good. And sometimes it's not as good as the car business."
ROI is basically “did this investment pay off?” It compares what you put in versus what you get back. They’re asking whether real estate is a better deal than the car business.
Return on investment (ROI) is the measure of how much profit or value you get compared to what you put in. Here it’s being used to compare real estate investing versus the car business, asking which one produces better results for the same effort and capital.
"I do it through Blitzpay. The guys and girls at Blitzpay are great... the back end automation... automated texts... The customers click and pay... they got this AI thing... the audio AI, the phone caller..."
Blitzpay is a company that helps car dealers take credit card payments. They also help automate customer messages and calls so the dealer can collect payments with less manual work.
Blitzpay is a payments/credit-card processing service that helps dealers take card payments and automate parts of the payment workflow. In this episode, it’s positioned as offering phone/text automation and AI features to improve efficiency in collections and customer contact.
"...use Blitzpay for their credit card processing, incredibly competitive rates, super easy interface..."
Credit card processing is the system that lets a dealer accept credit card payments from customers. It affects fees and how smoothly payments get handled.
Credit card processing is the infrastructure that enables merchants to accept card payments, including authorization, settlement, and payment routing. The episode emphasizes competitive rates and an easy interface as reasons dealers switch providers.
"we started using, I think what the software was, out of Zoom, great. I think out of Zoom was the first, for the first, you know, scoring model we had. And then after that, I think we might, we used Neo."
A scoring model is an underwriting/decision tool that estimates the likelihood a customer will repay based on their profile and deal characteristics. In dealer finance, better scoring helps identify which buyers and deal structures are lower risk. The transcript describes using scoring models to “tighten up” approvals and improve outcomes.
Concept
paper profit vs actual profit
"the topic's going to be, you know, where to recognize profit in the company and understanding the difference between paper profit and actual profit and, you know, that aspect of the business"
“Paper profit” refers to accounting profit that may look good on statements but isn’t necessarily cash in hand yet. “Actual profit” is the real money outcome based on cash flow, collections, and expenses. The speaker frames this as a core lesson for recognizing profit correctly in a dealer finance business.
"...one of the things that I know for a fact that wasn't around when I was around is the internet, man. The internet is huge. The wealth of knowledge today is just unsurmountable..."
They’re saying the internet makes it much easier to learn things now compared to when they started. Dealers can find information faster and more easily.
The speaker contrasts the pre-internet era with today’s “wealth of knowledge” available online. For dealers, the internet changes how quickly they can research regulations, financing practices, vehicle information, and industry best practices.
Select text to request an explanation
He goes, I'll give you $250,000, I remember that.
This is how our program works,
and this is land of credit, we'll renew every year,
depending on how your loans perform and so on and so forth.
We did it, right?
I got the loan and I was excited.
I didn't know what I was gonna do with it,
but I knew I got 250 grand,
so I didn't have 250 grand before,
so I was like, this is exciting, right?
He didn't give me the money,
but he gave us the opportunity to pledge the loans
that the bank and us get a little bit of them.
So after doing some serious analyzing
of what the proposal was and that I was on the hook for,
or if the customer didn't pay,
or if the car didn't get the insurance,
or whatever, I was mortified.
Hey everyone, before we start the pod today,
I wanna remind you to go to godwinconsultinggroup.com.
There you can register for our boot camp,
collections boot camp this May 14th
at the Homewood Suites at Atlanta Airport.
For those of you in Georgia and South Carolina
and North Carolina, super easy to drive in,
even Alabama, come on, come see me.
We're gonna study collections as a whole.
We're gonna learn to role play with our staff.
We're gonna learn things like recency, delinquency,
and how better can we prepare our collectors
to collect the money that we lend out?
It's super important, especially this time of the year.
So remember, godwinconsultinggroup.com,
the early bird ends this Friday,
so make sure you get in May 14th at the Atlanta Airport.
I really look forward to seeing you all there.
Now let's start the pod.
Hello and welcome to the Inde Pendant Dealer Podcast.
Luke, this is an exciting episode for me.
You and I, we've both known Caesar for a really long time.
You probably more than me.
Caesar was in one of my first 20 groups,
helping me kinda get my wings underneath me
in the buy here, pay here industry,
taught me some good lessons,
and was a great mentor and something to look up to.
But I never known Caesar's story,
so I'm really excited to be able to just,
just lob questions at you, Caesar, for the next 45 minutes.
Sweet.
Yeah, I tell you, he doesn't talk a lot
unless you really get him going,
maybe get a middle or later too,
and maybe he loosens up a little bit more,
but I tell you, Caesar's one of those guys
that he just knows his business, right?
And he's been doing it for a long time.
He's down there in the lower part of Texas,
so he doesn't come around a bunch of separate 20 groups
and things like that,
but when it comes to buy here, pay here,
there's not many better if there's any better.
And when it comes to the reinsurance game,
that he knows what to do and he's getting it done.
So thanks for being here, Caesar.
Thanks guys.
Let's, yeah, let's start the beginning.
You were in the refrigeration business?
I was, man, actually, it's funny,
I was talking to some folks the other day about it,
and I've had two careers in my lifetime,
and I didn't pick either one of them.
It's funny, opportunities come your way.
And so you either take them or you don't.
I remember when I was 18 years old
and fresh out of high school,
I didn't really know what I was gonna do with my life,
and anyway, to make it kind of short,
somebody offered me a job for the summer
working in refrigeration, being a helper,
and so I said, you know what?
I could do that.
I could use a beer money or whatever,
they threw stuff and somebody just being honest about it.
And so that took me into a 15-year refrigeration career
that provided a lot of the money and funds
for me to be able to get into car business when I did.
And so we did heavy commercial refrigeration,
we did work for places like ATV,
Lubies, we did Cracker Barrel, Chick-fil-A,
we did work for hospitals, school districts.
I mean, it was a pretty massive company,
and we stayed really, really busy,
but the problem with that company was that
I was on call 24-7, seven days a week.
So I mean, the money was good,
but you could be at somebody's birthday party
or a Christmas dinner or whatever,
and somebody would call and say,
hey man, the ICU unit at the hospital's down,
we can have somebody here.
And so since you're the owner of the company,
if somebody doesn't show up, you're the next man up.
And so after doing that for many, many years,
decide, well, what's the difference
between car business and that?
Your old car is 24 hours?
No, not necessarily with the car business, man.
At six o'clock, I quit taking calls.
I walk away cut.
And so with the refrigeration business,
I can't count the number of times I had taken a shower,
started to crawl in the bed and my phone would call off.
You get my clothes back on and it's like, right,
we got into the hospital or let's talk about
a big restaurant that's got a freezer
that's got tens of thousands of dollars worth of groceries
and the freezer and it's starting to melt
and it's starting to go bad.
And they don't care if you're tired.
They don't care.
They just want to.
Yeah, so when they've got $20,000 worth of groceries,
they don't really care what they're gonna pay you to fix it.
They just want you there to fix it.
And so.
So season, so you actually got into it as a youngster
and worked your way up to owner, you say?
Like you own it?
So I did, it was very interesting.
So I've always been very entrepreneurial.
So when I got into the refrigeration business
and I started to learn how to fix things,
after a couple of years being in the industry,
I started doing side work.
I'd get out of work and I'd go work on somebody's refrigerator.
I'd work on somebody's window unit.
And I would make, not quite as much money as I made in a week,
but I would make damn near working every afternoon.
I could replace my income, even side gigs.
And so, there was a moment,
when I was working in the industry,
and I'd been in it a couple of years,
that I remember talking to my employer about a race.
You know, there was a lot of guys that had been there
that I was working just as hard
and I was making just as much money for the company
as they were.
And they were making quite a bit more money than I was.
I was making like nine bucks an hour right then.
I mean, it was, oh, that a lot of money.
Oh, it was terrible.
And so, I remember asking my boss for a dollar raise.
I said, hey man, you know, I said,
so-and-so's making 16, so-and-so's making 17.
How about giving me another dollar?
And the guy said something to the effect of like,
you know, you've only been here so long,
you need to learn your place and wait your turn
or something like that.
It was like, it was off cutting to say the least.
And so, yeah, shortly after that,
I partnered up with somebody
and we started a company together.
You know, it's interesting, we're all bosses now
and we can all talk to this,
but how many times does an employee come to us
and ask for that dollar or two raise
and we didn't give it to them
and something like this happens?
Has it ever happened to either one of y'all before?
I know what's happened to me.
Well, you know, so something I've learned
in the last couple of years is try to give people
the money they deserve before they ask for it.
Oh, I love that.
Yeah, because it's hard to replace them.
So, oftentimes if you think about it,
so like let's say you have somebody
in a position in your company
and that person's been with you two or three years
and they've come up through the ranks
and they're making good money, right?
But they ask you for a little more.
Sometimes it's deserve, sometimes it's not.
So you come to a position where you have to ask yourself,
how much is it gonna cost me to replace this person?
How much is it gonna cost me to replace their training?
How much is it gonna cost me to give them the education
that they had with me for three years?
So am I willing to let them walk over a dollar or two
or even three or five, whatever the case is.
And chances are you're not
because it doesn't make any sense.
If the person's a good employee
and you can't replace them that easily,
especially with you.
Yeah, the only times I've said no
is when I should have fired them anyways.
You know what I'm saying?
If that happens to you.
If they're nice and you ask me for a raise, like.
No, not.
We've all been there too, so yeah.
I wanna know what the transition was
because that just like blows my mind.
Like if you're running a successful refrigeration company
and you were in Texas, I assume, like that's not going.
I mean, it's hot.
You gotta refrigerate everything down there.
Yeah, did you sell it or?
No, I gave it to one of my guys that worked for me.
I gave him the book of business.
We had a book of business and I said,
hey, you know what, well, let's back up a little bit.
So what happened was one of my guys that worked for me,
which had been with me a long time,
he was a curb stoner and that term is basically a guy
who goes on Craigslist or somewhere or,
somebody's got an old car in their yard,
offers to buy it and cleans it up
and puts it on the road and sells it.
And so this guy was managing to make,
couple of thousand dollars a week
selling two to three cars, you know?
And so after a period of time, I was seeing him do this
and I said, you know, I said,
we should open up a car.
I said, you know, I'll get the license.
I'll get the building, a biasing inventory, you know,
I'll be the owner, but we'll split the proceeds,
you know, accordingly to whatever deal we make.
And so we agreed, right?
So we agreed to do this.
And so, you know, I got a little bit of money put together
which wasn't a lot, you know,
it was what I could scrounge up at the time
and got a place, leased it, got the licensing.
And after about two or three months of being in business,
you know, we've started button heads real hard, you know,
cause I wanted to do everything, you know,
we needed accounting, we needed to make sure that the,
you know, whatever we spent was, you know, cataloged
and we could, you know, show the,
You were a business man at that point.
Right. And so this gentleman wasn't.
And so anyway, we, we, we ran into, you know,
different operational ideas or whatever, you know,
we just didn't, we did, there wasn't no long story short.
I just said, Hey man, what do I owe you for your time?
We got to separate ways because this is not going to work.
It was very basic stuff, the sense of going to that.
And so we parted ways.
I wrote him a check for his time and now I've got a business.
I've got a building, I've got inventory
and I had no desire to be in the car business, but it was there.
So again, so this, this hurt was back to my, my comment
that a lot of times opportunities arise, right?
So now I'm there.
So what do you do with it?
So I realized that I'd been doing refrigeration at that point,
like 16 years and I didn't like being on call all the times.
I thought, well, maybe this is my opportunity
to do something different, you know, where we shut the doors
down at six or seven o'clock and I can go home
and not worry about it till I show up the next day.
And so I gave it a go.
So I would park my service truck at the dealership
and I would wash cars and I would work on cars
and I would do all the changes.
And in between, you know, being on call, you know,
if somebody would call and run and make a call
or whatever, fix something and come back.
And so that's how I did it.
And so it just transitioned into that.
And eventually some years later, it got to the point
where, you know, I was either going to have a mental breakdown
or, you know, a stroke because I was trying to run to you.
This is, you know, I had my foot in the work truck
and I had my foot trying to sell the car.
And so it was just, I had to pick one.
And so I had already been down one road.
So I said, well, let's just let's stick it out
with the car business and see where it comes.
And what year was that season when you decided to get all
in the car business?
You know, I opened a dealer.
So something that's interesting next year
will be our 20th year in business.
So, you know, it's pretty, pretty, pretty remarkable.
You know, all in its own.
And then so we got into the car business in 07.
And I'd say it was like somewhere in 2011,
which is a terrible idea.
So just to show you that I knew nothing about the car business
or the finance or the banking or anything
because I decided to get into the car business
in the worst, worst possible time, which is 07, 08.
I mean, you know, the.
Yeah, yeah, yeah, well, bad timing, for sure.
Yeah, the sky was falling.
And, you know, the last place you wanted to be
was in the car business.
But of course, you know, I had no freaking clue.
And so yeah, in the car business, so, but, you know,
I'm not a quitter.
So I mean, I was, you know, I was there.
I'm like, we're going to make this work.
And so I think in 2011, 12, something like that.
Maybe maybe it was 14.
So it was in that period between 11 and 12.
My wife would know that, you know, we just couldn't do it anymore.
My wife said, you know, you need to pick one.
And Cesar, were you were you automatically in the buy here?
Pay here's face or no, no, I was very.
I mean, I was my ideas were very granular and very basic.
I thought, you know, if I can generate another 20 grand, 15 grand a month,
you know, selling 10, 15 cars, if I can make a thousand dollars a piece
or after expenses, you know, I could, you know, I could make my life a little better.
And so it was very basic.
There was never any ideas of grandeur of getting into the buy here,
pay here space and and, you know, but, but gradually I started
to learn a little bit and, you know, look at my competitors around town
and they all had buy here, pay here, dealerships and how that was going.
And I started doing a little bit of research
and trying to determine if that's something we wanted to do.
And I think maybe after year two, you know, we got my finance license.
Maybe, yeah, after a year or two, we got our finance license
and we started trying to find in some cars.
And quickly I realized that selling the cars, you know,
finance was not the problem.
The problem was funding all the deals, you know.
And so you quickly start to run out of steam.
So we were taking all the money, you know, that we're making
in the refrigeration company and just, you know, funding deals
to try to put cars on the street.
And obviously there's only so much money refrigeration company can make
when you're not there 100 percent of the time you're trying to do two things.
And so both actually one of the big lessons I learned there is that, you know,
both things, you know, both businesses suffered because of my, you know,
my not being present, you know, 100 percent one or the other.
But it was necessary in order for me to get it, you know, get it off the ground.
You know, and so there's some other interesting things there
because I remember I'd had a really good relationship with my local bank,
which we still do.
We've been we've been doing business for 30 years, I guess now.
Maybe 35 years, I guess it's been a minute.
But whenever I went in there and I asked them for money
and those seven or eight to be in the car business, you know,
they basically left, laughed me out of not, not, not like, you know,
but they said, Teaser, it's just, you know, I think the the the question
my banker asked me at the time was like, what do you know about the car business?
I was like, well, not a lot.
That's a bit, you know, hard going to be to sell a car.
It's like selling an air conditioner.
Right. I mean, that was a very basic statement.
I mean, it wasn't a very accurate one, but it was a statement that I made,
you know, not knowing a lot about the car business.
Well, they underestimated your hard work and knowledge of mechanical things.
Right. Yeah, I think so.
But, you know, they did be a favor.
And so if you look at, you know, I think of a pivot pivotal moments
in my business, that was one of them, right, because they didn't give me any money.
So I had to leave their office, not having any funds to do what I wanted to do.
So two things happened.
Or one thing for sure, I was forced to learn how to make money without money.
I was having I was I was forced to watch every penny.
I was forced to stretch every dollar.
I was forced, you know, to take every low hanging fruit that was available to me.
Right. So for the first three years after that, you know, three or four years
after the business started, we didn't have anything but the money
that was coming from the from the refrigeration company.
And so I remember like three and a half years or so after that meeting
with my banker, he called me out of the blue.
I don't know if it was because, you know, the economy was getting better
or because he was just curious to know if I was still in business.
And so I remember his question to me was, how's it gone?
He asked me about the refrigeration business and he goes, see you're doing good.
He goes, how's the car business?
He goes, are you still in the car business?
I said, yeah. I said, you know, we're hanging in there.
And so he paused for a moment and said something to the effect of, well,
since you're not out of business and you're still in business, there must be something there.
So why don't you come into my office and let's talk.
And so that was, that was, you know, that was the moment where I thought, hey,
we're going to, we're going to, we're just not, you know, the gates of heaven are going to open
and we're going to be like, you know, we're going to be making money and well, was I wrong?
Because, you know, one of the things he proposed to me was it was recourse lending.
I don't know if you guys are familiar with, you know, old school.
Oh yeah. That's no good.
Yeah. Old school banks would give somebody a line of credit and say, hey,
go, go get some clients for me, finance them. We're going to finance them under the company
or under the, you know, the bank name and, you know, you're, we're going to give you a little
bit of money, but we're going to get all the interest and payments and if everything goes
well, you're going to get a reserve at the end of it. And so, you know, when that happened,
I was like, well, he goes, I'll give you $250,000. I remember that he goes, I'll give you $250,000.
This is how our program works and this is line of credit. We'll renew every year,
depending on how your loans perform and so on and so forth.
And we did it, right? I got the loan and I was excited. I didn't know what I was going to do
with it, but I knew I got 250 grand, so I didn't have 250 grand before. So I was like,
this is exciting, right? He didn't give me the money, but he gave us the opportunity to pledge
the loans at the bank and us getting a little bit of them. So after doing some, some, some, some
serious analyzing of what the proposal was and that I was on the hook for it, the customer
didn't pay, wrecked the car, didn't get the insurance or whatever. I was mortified that,
you know, I was going to have to pay the bank back the money and not have anywhere to pay the money
back from. So I was very careful as to who I put on this program. And so after that year, it went
through the banker called me again and said something to the effect of like, well, we saw
you did some loans, but not very many. He said, do you want to renew the loan this coming year?
And so anyway, I had an idea, right, that I was going to propose to the bank and kind of flip,
you know, the script on the guy a little bit. And so I said, hey, I got an idea and if you'll
humor me, I think I can show you how we can both make more money. And so he did. So that's what,
that's really one of the key moments and how, how, you know,
he started to break into real quick, but make sure you guys know about Buck guy,
long time, awesome sponsor of 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 buyer, pay here, lease your pay
here or retail dealer, it works for all dealers. You can set up a reinsurance company. You can
ensure 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 Buck guy risk services and get
set up ASAP. And so you presented to him, Hey, I'm going to do the loans, you're going to,
they're going to be, they're going to be capitalized or they're going to be
securitized by the contract, by the titles, by the contracts. And I'm going to make the money
and I'll pay you the interest you want anyway, right? Or more than what they were getting.
Correct. So what we ended up doing, which coincidentally, the bank has changed their
model of doing business in this aspect. And so what we ended up doing, so like most conventional
lines of credit, you know, even like, you know, most dealers nowadays, they get, they get a line
of credit and they have a borrowing basis and they pay interest and it's basically interest only.
And so there's really no way of reducing principal, right? So when I sold my bank, so,
so when I sold my banker on the idea, they're also, they had a floor plank company in the bank,
right? Where you could floor cars and, you know, they would give you an advance on the car. So they
had, they had a method of doing the accounting. So what I proposed my banker was this, I said,
what do we do micro loans? What do you mean? I said, well, look, I said, what if you, you know,
take a car that we sell? You know, because he, I was having to pledge the car at the, at the,
at the bank anyway, and only getting a small amount of money. So I said, what do we do this?
What do we do it this way? I said, why don't we pledge a car to you? I said, you will advance.
Let's, let's just use specific, easy numbers. Let's say that the, that the car sold for 10
grand. Let's say the car cost is five, right? So we have 5,000 in gross, 5,000 in cost.
And let's say we got $1,000 down from the customer, why don't I pledge the car for four grand and
I pay you principal and interest on the four and I make, you know, I received the principal and
interest on the six, you know, or, or, or, you know, or the five from the five. Yeah. And he goes,
and I said, look, I said, the loan value of the car is five grand. I said, you're,
you're over collateralized already. So, you know, from, from this aspect, you know, you're
doing good. And I said, and I, and I built, you know, cash flow. And he sat there and looked at me
for a minute and just, you know, thought about it and thought about it. And, and he says,
he goes, have you been to some seminar or something? I'm like, no, no seminar. I said,
I just been thinking about this. And, and so anyway, we went along with it. So he gave me the,
he gave me the 250 grand again, but this time we ran out like six months because we were doing,
you know, we were in the manner that's producing cash flow for us. And so we took that 250,
250,000 over nine and it, and it's peak, we had like three and a half million dollars at the,
at the local bank at 10%. Oh, wow. That's great. Yeah. And it's at its, at its inception to its peak,
it was three million. And just, I mean, you, you continue to do this.
How, what's the largest you've had on the books the entire time now?
Uh, is principal balance for me or? Yeah. Probably like 11 and a half, 12 million
dollars right now. My principal balance is about 10, 10 million and some change.
Yeah. So we owe the bank a little under a million. We, we've kept that, that,
that relationship open just because. Yeah. I mean, you could pay it off anytime, but
it's nice to have those relationships, right? Right. And they were good to me.
So, you know, we didn't skip out, you know, uh, and go to different banks. We, well,
we did use different proposals from different banks because it's, it is inception, you know,
when the bank first gave us the line of credit, it was like 14%, which is really good. And compared
to some of the banks out there, you know, we're not going to name any of you into this particular
juncture, but you know, some of the rates are a lot higher. So I was, I felt, you know, uh,
that I was very fortunate that I had a 14% line. But then when other banks came in and said, Hey,
we'll give you eight or eight and a half. You know, I would just take the proposal to my bank
or say, Hey, buddy, I love you, man. But, you know, I got a better offer. I would never leave,
but I would just use it as leverage on them to get, well, renegotiate.
Yeah. I mean, what's funny is people think, you know, people are complaining about that 14% money
and, and don't get me wrong, 14% is a lot to pay for money. I do a lot of capital
loans to people with perfect credit at 14%. Um, so it's not that, that, that money's too
expensive. A lot of times the grosses aren't there. The margins aren't there and, and your
expenses are too high and you already had that nailed. And so you can make plenty of money
at 14%, right? Absolutely. Yeah. You can make a bunch of money. Is that just, it just, just
have to break it down at a granular level where you can understand. So I mean, you're making,
um, I don't know what state max is around the country, but in Texas it's 26 and a half percent
based on the year of the vehicles. It could be like 24, 25 or whatever. So on whatever,
on whatever portion of the gross of the vehicle, you know, uh, you've got, you're making 26% and
you're, you know, and on the rest of it, you're making 16 if you're paying the bank 10. So you're
making money, you know, on the spread plus the gross of something, you're making money coming
and going. So it doesn't matter as long as you haven't figured out as to how you're going to make
money on the deal. I think Jeff, yeah, I think some people go into it and just don't know the
numbers like that, right? Well, yeah, I'll be above. I want to ask these are two questions along
those lines that makes me think you and I both started about the same time, right? And you have
grown exponentially larger than I have, right? What do you feel, what, what made that possible?
Like to go from a $250,000 loan, even a $3 million line of credit with the bank
to now 20 years be later to be at, you know, 12 million free and clear, that's,
that's pretty awesome. Like that's, you're not doing that in a lot of other industries and a lot
of dealers like myself haven't been able to do that either. How do you, how did you accomplish
that? What would you credit that to? Man, you know, I would, I'd love to say I'm lucky or I'd love
to say that I'm good, but I mean, I got to give it, you know, I got to give it glory to God. I
mean, because it wouldn't be possible without his, his, his grace. And so I think, you know,
God's blessed our business, you know, exponentially, but it's also hard work. I mean,
you got to show up if you don't show up, you got it. A lot of times people don't do the basic things,
you know, all the time, you know, you get in it all the time, you know, you can't just show up on
Friday for, you know, collections or whatever. You know, I would show up at work an hour before
everybody, you know, I'd have to hustle and, and I would eat, breathe, and sleep car business,
you know. And so I think, I mean, I think that, you know, obviously God's blessing on the business,
but I think that working hard, making sure that you do the small things right. A lot of times
people are looking for like, you know, this one idea that's just going to propulse their business
to the top and it's not that it's a combination of so many little things in the industry that
people don't do right. I'm not saying that I did them all right, but you know, you figure out what
you do well and you do that some more and then what you're doing bad, you know, figure out what
the opposite of that is and just, you know, keep going. And you know, the other thing is,
you know, I was thinking about this the other day, I think trying to find a niche in your,
in your community. Okay. Yeah. You know, there's a lot of guys and, and I'm not saying it's
incorrect, but there's a lot of guys that have inventory under lots and they want to compete
with Carmack. So anytime you have a $30,000 vehicle and you're a lot, you know, you're,
you're basically making, you know, every retail business such as a four store Chevy store, your
competitor. And, you know, they have much deeper buying power, they have much better financing,
they have much better warranties than you do. So, you know, it's a Samsung, you know,
it's like a David and Goliath. I mean, why would you want to do that? Why would you
want to beat yourself up that way? And then, and then you, I mean, look at Tri-Color.
Tri-Color was doing the same thing in our community. They were buying $20,000 ACB vehicles,
selling them for 30 grand to people that were my customer and taking a thousand or $2,000
down and putting them in a seven year note that we're not going to be able to pay. And well,
that's the result of how that went, you know, among other things I'm sure. So,
what we ended up doing is we found a market that we could, we could kind of carve out for ourselves,
which is, you know, our industry now, or, you know, our business, which is, you know,
sub $15,000 cars and, you know, keep the, keep the loans relatively short three or four years,
you know, payments where it's affordable. And even though we may not have the
prettiest and shiniest cars on the block, you know, but it's, it's, it's our market. And so,
you know, it's important to know what you, if you don't know who you're talking to, how can you,
how can you, you know, market to that? You got to figure out what you want to do.
Yeah, I think you're totally right there. And I think a lot of people do miss the boat on that.
Jeff, a lot of people have had bad tax seasons that I want to fast forward to this tax season because
Caesar, you did a little, you did something a little different in the last six months and
you had a, you had a very good tax season. Can you walk us through what happened and where you're
over? So I was, you know, you know, prior to the phone call that we were having, you know,
was telling you that we closed one of our locations. And so, you know, there was reasons when,
there was reasons why we opened that location back in 16 and, you know, and, and made a lot of sense
then. You know, but, but the industry has changed, you know, people, people don't just do walk-ups as
much as they used to anymore. I mean, people go to your store based on an appointment, you know,
it's more, everything's more online, you know, driven, it's appointment setting, it's, you know,
things of that nature. So, you know, multiple locations aren't necessarily, you know, needed
nowadays. So anyway, so one of the things we analyzed having our second location in this last
year is we figured out that, you know, the originations of the loans that we were conducting
were really from our principal area where our first store is located. So seven, eight, you know,
six, seven of the deals that we were selling at the, at the, at the north location originated
from zip codes in the area where we had our principal store. So we realized we were cannibalizing
ourselves. And we thought, well, you know, we don't have, you know, the, the output in the shop in
order to continue keeping both stores completely full. Why would we want to do that anyway? Because,
you know, we're selling all of our cars, you know, to the same base. And so we said, we're going to
take a, you know, we're going to take an opportunity to try and see if we could consolidate the one
store and see if we could sell more. And so last year in September, you know, we shut down our
north location and, you know, took it, took into account what we've been selling. And so October,
November, December, January, February, and, and the date we've sold more cars with one store
than we did the prior months with two stores. And so, you know, it was giving us an opportunity
to consolidate our inventory, to consolidate our efforts. It's a lot easier to, to oversee one
store, let alone two. And so it's just been, it's been incredible. You know, it was something we
should have done a long time ago. And like I said, the, the reasons for opening the store when we did
were good, but we should have closed the store sooner. And a lot of times, I think, you know,
pride or, or, or being stubborn, I'm not sure a combination of both things sometimes occur. And
so you just have to look at the things on the, you know, at, at Facebook or face value at the
time and just make a decision based on what you've got in front of you at that moment.
Yeah, I think it's interesting you say that you did the statistics and you looked and said,
okay, it doesn't make sense. We're cannibizing our main location. And so, so you had facts in
front of you, right? You had the facts that said, this doesn't make a lot of sense. Maybe our stores
are too close together at this point, because we're just stealing traffic from the other store.
And that's got to be hard to feel like you're stepping backwards. But hopefully in the meantime,
I mean, if you buy your second location, which I think you did now, you've got an asset that
has been paying on. So their strategic win. Absolutely. Yeah, the property, you know,
the property is still being used as to store some inventory in the interim while we figured out
whether we're going to sell it at least or what. But yeah, you know, again, you know,
God's been good to us. We, you know, we bought the property right, you know, we built it up. And,
you know, I think the property is worth, you know, a couple of million dollars and we don't owe
much on it. I think a couple hundred, a couple of hundred grand. Yeah. So Caesar less. Yeah,
that's great. Let me talk to you. Let me ask you a question, because you said earlier, like,
kind of staying focused, you know, and you've been there and you're hustling and you're there
an hour early and you're staying late and you're working hard. But there has been a point in your,
your career where you've started to, to diversify, right? I mean, you've started to get into other
areas. What is that? When did you decide you had the bandwidth to start looking at real estate and
other things? And how did you, how do you fund that? How do you justify the return on investment?
Because sometimes real estate's good. And sometimes it's not as good as the car business.
Correct. You know, well, you know,
if you might have been in 19, that I decided to, so I had a friend and some 20 group moderators
have been nagging me to get into the reinsurance gang. And so, you know, obviously, and I mean,
nagging because it would nag and I'm like, dude, get over it. Am I going to do it? You know, I mean,
I've got, you know, 10 million on the books and if a hurricane comes and I'm wiped out, I don't,
how, how is this going to work out? So all, you know, so they're talking about CPI specifically.
Correct. Yeah. And so, so, so basically, you know, so when I was looking at reinsurance and
collateral protection insurance for my company, you said, hey, I got 10 million in principle.
And, you know, even though a lot of the insurance companies that they were insuring our cars
would not pay claims because, you know, not the right person was driving, you know,
we'd have to do collections for the insurance companies. There's so many different reasons why
conventional insurance is a bad idea. You know, for the buyer, pay your dealer who's done,
it was not doing CPI as a product for their company, they're leading money on the table.
So to the fear, to be able to explain why I hadn't done it to that point was, you know,
what if we get a hurricane? What if it, you know, ruins my portfolio? What if I go broke?
I don't have an eight-figure. This is all I got. So, I mean, you know, you have all these things
kind of going through your mind, you're thinking, it's horrible, right? I don't want to start from
scratch. And so, Hurricane Harvey happened right around that time. It was a big old hurricane,
hit Rockport, 180-mile-an-hour winds, you know, there's like 30 miles north of where I live.
I lost three vehicles. That's it. Two floods or whatever. And so, one of the things that I
realized at that moment was that most customers, you know, left with their cars. They went to
San Antonio, they went somewhere else. So, my cars were not in the area. But of course, I was, you
know, concerned that I was going to lose my portfolio. So, once that fear had been disproven,
I'm like, okay, well, now what? So, let's get into the reinsurance game. And so, a good friend
of mine kept, you know, pushing me to do it. And I did it. And my only regret with not getting
into reinsurance sooner was that I didn't, you know, participate. Didn't get into it sooner. Yeah.
Yeah. That was a small regret. And so, it's been good to us. You know, we didn't know how much
participation we were going to have from our portfolio. And, you know, participation has been
great, you know. And so, that afforded us, you know, to start putting money into the reinsurance
company. And then five or six years ago, maybe, yeah, somewhere in there, we started buying foreclosures.
You know, we started doing a little bit of research into buying foreclosures at the tax
at the courthouse. And we've accumulated about 50 doors, you know. Wow. Yeah. And so,
we, you know, we did, we, we funded a vast majority of that, you know, with reinsurance
money and then a bunch of it. Not a very, a small portion of it, we ended up, you know,
pledging at the bank to, you know, free up some capital in case I wanted to do something else.
But, but the reinsurance paid for most of it. It really did. And so, it's, it's, it's pretty,
pretty incredible. And, you know, we've been able to diversify into other things, you know,
some stocks and stuff like that also by moving the reinsurance company funds into, you know,
different investment accounts. And so, it just, it opens up so many different avenues and at the
end of the day as a car dealer, you know, the business has afforded me to do, you know, different
ventures. And so, it's been pretty incredible. Nothing to complain about for sure. Yeah.
Caesar, do you think, and I want, I want your opinion on this, because a lot of dealers that
are listening are probably starting out, right? They're new, they're young, they're going to
talk to their bank, they're trying to get a line of credit, they're trying to get started.
Is it the same now as it was even back in 2010, 2008, you know, those areas when you started,
it seems to me like the math is not quite the same. You know, we used to buy a $3,000 car,
sell it for $79.95, great buy here, pay here unit, it would typically run the loan. Now,
I'm buying an $8,000 car, I'm selling it for 10 or 12, you know, I'm not making 100% markup. And
I still have all these mechanical issues and repos and charge offs seem to be going through the
route. Do you think you could do again now, today, what you did back then, or do you think that was
a magical time? No, you know, I don't think, I think that the, I think that the cost of entries
is definitely higher, you know, but, you know, looking at it back then when I got started,
I mean, it seemed unsurmountable. It seemed like it was impossible, but I mean, it was,
it was done. So I think, I think, so listen, I have a friend of mine, and I think you guys know
Pokey and Blaze, and, and they do, you know, a price point unit similar to what I did, you know,
when I first got started, but they're much better at buying because they buy all over the country.
So I think that if you're going to go into the business, you know, you have to take what you
have in front of you, and this is your skill to purchase vehicles. So for example, when I used to,
when I first got into the industry, for four days out of the week, I would go buy carbs.
And I may go to an auction, and I may go home with nothing, and I may go to another auction,
and I may get two or three, and I may go to another auction, and I may get four,
or I may get nothing, but you spend your entire time, which is what you have. You don't spend
any money to be able to raise your hand, you know, the entire time. So you have to be able to,
to make those opportunities and the lane count. And it doesn't mean that you have to buy the unit.
It means that you just have to find the opportunity to finding what you can buy,
and nobody's looking, and it happens, you know, a lot of times, you know, you just have to,
it's just an opportunity, it's a game of chance. The more, the more time you spend in the lane,
you know, the better you're going to do for the purchasing. So at that, you know, so if you're,
if your commodity is time, then use that. If you have money, you can use your money. But,
you know, when you begin in the industry, all you do have, you know, what you have a bunch of this
time. And it's, and it's all, and it's all made when the point of purchase, right? And the money
is made, and even in the buy here, pay here space, retail space, no matter what it is,
is having the ability to find the cars your customers want that are good cars at the right price.
And if you can do that, everything else works out, right? Correct. You know, something that,
you know, Jeff was saying that we, did you say you were having like a $2,000 or $3,000 gross is,
is, I think you could pull an $8,000 unit, you're marking it up to like 10, Jeff?
Yeah. Yeah. I'm just saying nowadays, there's not the same kind of markup as we used to. It's not
cost times two plus a thousand anymore. I mean, you know, our markups stay the same, you know,
which is, you know, at the average of $5,500 to $6,000, as what our markup is. And so, you know,
if you buy a six or seven, say it's called a $6,000 unit, it's $11,995. If you buy a $7,000
year, it's $12,995. I mean, you know, your consumer is not going to go to a forged door
and buy a car for $12,995. You know, they're not going to, even if you, you know, if you're
out there. Even if it's a $13,995 unit. So, you know, don't give up on gross, because the,
you know, the gross, you know, affords you the, you know, the ability to take charge
offs and stuff like that, you know, in your portfolio, when it corrects or when it,
you know, whatever. And so not having those margins in there makes your business almost
impossible to conduct, you know, because you have this is, yeah, this is, this is a discussion
I've had in 20 group over the last, uh, last six months, a lot gross, gross, gross. And
you know, I've always been the one that thought low gross made a better sense. And I'm not sure
how gross makes the most sense, but I think there's a medium in there because we've lost gross
and we can't continue to lose gross, uh, because margins gone, interest rates are higher,
uh, expenses are higher. So I don't know what the right answer is because if your gross is too
high, your, your charge also going to be too high. So I don't know, there's a happy medium
somewhere. I'm not sure where it is. Well, you know, I think the answer, I think the answer
definitely, uh, can be found in the math. For example, depends on your repossession rate,
right? I mean, so, I mean, if you repossess at 50%, well, then how much, how much, you know,
how much margin do you need to be able to absorb that if you got to have a high margin?
Correct. I mean, if you repossess at, you know, better than Santander, which is 10%,
which is, you know, nuts. I don't, you know, it's unheard of in the bike or pay here industry.
And if you're doing that, you need to lend more money because you're not lending enough money
if you're repossessing at 10%. There was always, that was always my problem.
Yeah. So I mean, I'm not judging. I mean, I'm not, I mean, you know, one way or the other,
whatever business model people conduct is, uh, is, is their business, but it's in the math.
I mean, numbers don't work. All right, Jeff, sorry to break in, but we got to talk about
putting money in the bank. And how do we do that? I do it through Blitzpay. The guys and girls at
Blitzpay are great, amazing, attentive on top of it. I have had little to no issues since I switched
over from that other company. For sure. They, to me, they're probably the best services when it
comes to answering phone calls and taking care of things that I've ever seen a vendor.
Um, and the back end automation, I've actually been working with that for a couple of dealers here
lately and going in and changing up these automated texts that go out super simple. They work, uh,
the customers click and pay. It's fantastic. And also they got this AI thing, Jeff, pretty cool.
Yeah, I'm stoked. They got the audio AI, the phone caller, and hopefully very soon the texting
version of that. So it'll help my collector be way more efficient in the future. I'm super stoked
to see the AI get integrated into the collections process and Blitzpay is on the cutting edge of
it. So if you're taking credit cards at all, whether you're buy or pay or lease or pay here,
even retail dealers can take advantage of this and use Blitzpay for their credit card processing,
incredibly competitive rates, super easy interface, call the team over at Blitzpay and move your
credit card processing today. Yeah, that's true. We talk about static pools and you need to look at
those static pools and say historically, how many of my customers make it to the end of the loan.
Correct. And that's not necessarily a good thing. You know, like in the buy here, pay your industry,
you don't want nobody making it to the end, but you don't want everyone making it to the end.
Right. So accounts collecting and what's my CRR on these accounts. Wow, my CRR is way too high.
I need to charge more for these cars where I could charge more for these cars.
But Cesar, you told me before we got on the call that you had tightened up your underwriting,
was that it caused your repo rate this guy too high and you were chasing your tail?
Well, you know, so, you know, we talked about it earlier.
You know, we would sell, you know, some taxis in the past, we would sell, you know,
150 cars a month, you know, during January and February or whatever. And we would get a stack
and move, you know, after the first quarter, you know, after what we call taxis and hangover.
And so we weren't necessarily making a, we were selling the car based on a down payment,
you know, because like, you know, that's what everybody does. I mean, you know, and as you,
and as you go along in your business, you know, you want to, you know, you want to be able to sell
a good car to a good consumer or at least a consumer that has an opportunity to make the
loan, right? So we tightened up a little bit. And I think we started using,
I think what the software was, out of Zoom, great. I think out of Zoom was the first,
for the first, you know, scoring model we had. And then after that, I think we might, we used Neo.
And then so once our Neo, I think Neo was the reason we started tightening up some more is
basically the model started evolving and, and, you know, showing us what we were doing wrong,
what we were doing well. And so, you know, a repossession rate has definitely decreased. I mean,
I'm not saying that, that it's, you know, it's within, it's within company, you know, industry
standards. Yeah. Yeah. Well, I mean, you're making money. So that's a big deal. That's where you're
supposed to be. Caesar, you, I mean, at this point, you've done all these things. And now you're
going to be speaking about here, pay here, United on the Spanish track. Can you, can you talk to us
about what you're doing there? You know, I think that, I think that the, the topic's going to be,
you know, where to recognize profit in the company and understanding the difference between
paper profit and actual profit and, you know, that aspect of the business, you know, because a lot of
times, and I haven't seen the entire format business just, you know, from what we kind of
discussed a little bit, you know, there's, there's a lot of times, you know, people, you know,
generate a lot of gross and they believe they can take, I mean, maybe they have the, the,
you know, I guess the thought process that, well, they can spend that, well, they can't spend that,
you know, there's a debt in paper profit and money in the bank. And so you can cash flow and
things of that nature. And so I think that the track is basically to talk to the community about,
you know, how to understand and better recognize our financials and the different, you know,
aspects of the business. And so I was very fortunate to be asked, you know, to speak and,
you know, because I'm, you know, bilingual. And so, you know, looking forward to see what,
you know, what I can do to help.
Caesar, let's wrap up with this question. I want to know what's in the future? Like, what do you
see the next 10 years being for you and your dealership? Are you, are you bullish on buy here,
pay here, bearish? Are you moving completely into real estate? What's your game plan?
You know, you know, that's funny you asked that question. So,
funny you asked that question. I'm fixing to be 52 this year. I'm still relatively young, you know,
isn't that funny? You know, when you're, when you're in your 20s, you see a 52 year old guy
and say, well, that guy's dead. That guy better not plan more in a week at a time because he
could die at any moment, right? Or something like that. And so, well, I'm 52. And I've been in the,
I'm going to be in the business, it's coming your 20, 20 years. And so, I have a little boy,
right? He's nine. And so, my wife would like for him to take over the business when they're,
you know, or have participation in the business. But I would, I would like to think that I will
have either exited the business, you know, or looking to exit the business, which I mean,
you know, I don't know. I mean, it's, I'm, I think that the buy here, pay here business is
going to be here forever. It's a good industry. I think that there's going to be, you know,
new things that come up. I mean, I don't know of another business that has more things to own
at it, you know, either by government regulation or, you know, the alphabet people, you know,
the CFPB, the OCC, the whatever. But, you know, we navigate to it, navigate through it as a
community. So, I think all that will be fine. And I think, you know, people always need transportation.
So, I think I'll probably be in the industry. I think the industry will be good. You know,
anytime. So, I don't know of another industry that when lending tightens up, we do good.
And when the economy does good, we do good. So, I really don't, I haven't had a bad year
in the industry. I mean, the industry's been good to me. I mean, it's afforded me to do a lot of
different things. And so, I'm blessed, you know, and, you know, so I'll give you something that's
interesting also that I thought about the other day. I remember I went to a TI88 convention in
Houston when I first got into the industry, right? And so, I'm looking at these folks up there,
you know, at the panel talking about, you know, having a thousand accounts on the books and so on
and so forth. And so, I was so enamored. I mean, I was looking at these guys like they were rock stars,
right? And just couldn't imagine how the heck did they pull it off? I mean, how did they get the
afforded to, you know, the knowledge, the financing, I mean, you're just like,
how it just seems so unsurmountable. And so, you know, here I am 20 years later,
you know, I'm a speaker, and by here, by here, United, you know, I've been invited
previous years, you know, I'm a board member at the TIADA. So, you're one of those guys?
Yeah. So, I mean, I didn't think it was, I mean, at the time it seemed unsurmountable, but I mean,
it's, you know, everybody can climb the hill. It just takes one step at a time, one foot after the
other, and it's doable. So, I think that the buy here, pay here industry still has a lot to give
to a lot of people that want to commit to it. And so, by committing to it, you know, you have to be
committed to educating yourself, understanding things you don't understand. I mean, there's,
you know, your local state association, you know, your buy here, pay here, United's of the world,
NIA, EDA, 20 groups, whether they're, you know, whoever's putting them on, you know, local dealers
if they want to share knowledge with you, you know, obviously you guys, the independent
EDA podcast is a great source of information. I mean, there's just so much, so much information,
you know, one of the things that I know for a fact that wasn't around when I was around is the
internet, man. The internet is huge. The wealth of knowledge today is just unsurmountable compared
to what, you know, we had when we got going. I mean, there wasn't anything hard. I mean,
the internet was around, but the wealth of knowledge wasn't collected as it is today.
Yeah. It's just, it's there, you know, and so it's, you know, it's anybody's game,
just got to get after it. Well, what, you know, you talk about with 50 rental doors,
though, Caesar, what's, is the future, is that the future or no?
No, I don't think so. I mean, so, I know Jeff does real estate too, and so he kind of commented,
you know, so real estate does really well and it does really bad. So here's my thing with
real estate. Real estate cash flows well, but what are the things that kind of hurts the
real estate game is taxes and insurance against windstorm here on the coast. So it seems like
every year I have to fight, you know, my property tax rate. So yeah, it's past year. So I hired a
company to fight, you know, my tax appraisals and they lower my appraisals on my properties by about
a million bucks. They were over appraised by a million dollars, you know, which is insane.
And then whatever they save you, you got to split it with them. So I mean, did you really save
anything at the end of it? They just created an industry for somebody else to make money.
And so I don't think so. I mean, I think real estate is something that my kids are going to be
able to inherit. There's a way to build wealth, you know, through appreciation. But I don't think
it's something that, you know, we can, you know, plan a cash round kind of thing. But it does make
money. Don't get me wrong. I'm not saying that, but you know, the money makers in car business,
it's incredible. Yeah, that's exactly what we talk about. The buy here pay here industry is a great
way to, if you have one dollar to turn into two dollars, real estate is a great way if you have
two dollars to keep it two dollars. If I had 10 million dollars, I would not do buy here pay here.
You know, if I had a hundred dollars, I would do buy here pay here. If I had 10 million,
I would stick it in a commercial real estate. And Jeff, yeah, you and I have talked about this.
The buy here pay here industry and the car business industry is just a great way to get
your feet on the ground and make money. Correct. Yeah, it's a giant stepping stone. I mean, how
else can you take, you know, a guy like myself and, you know, 20 years later be able to do some
of the things I've done, you know, so it's interesting for sure. And it didn't open anybody.
The thing is, it's just tougher nowadays. You just got to work hard. Yes, absolutely. Yeah.
Caesar, hey, this has been great. Thank you so much for your time. This is definitely one for
the record books. I don't know what episode we're on finally to get you on here and who twisted
your arm to get you here. And I really appreciate it. Hey, well, anything for you guys? I'll see
you guys. You guys are going to buy here pay here United as well. Yes, sir. We'll see you there.
Awesome, man. Well, we'll see you guys then. Thanks, bud. All right, bye. Later. Bye.
Request an explanation for:
Request an Explanation
Heard something you'd like explained? We'll add it to this episode.
Sign in to request explanations for terms you heard.
Want to learn more?
Browse our glossary for plain-English explanations of automotive terms, jargon, and concepts.
See something that's not quite right? Our annotations are AI-generated and can sometimes miss the mark.
Click the flag icon on any annotation to suggest a correction.
