bhph portfolio buyers

What is the process for selling a buy here pay here portfolio

Steps to Selling a Buy Here Pay Here (BHPH) Portfolio


1. Compile Portfolio Data:

  • Collect detailed information about the BHPH loan accounts to be sold.
  • Include loan details such as outstanding balances, payment histories, interest rates, etc.
  • Mask sensitive customer information to protect privacy.

2. Decide on Portfolio Structure:

  • Determine whether to sell the entire portfolio or segment it into smaller pools.
  • Consider factors like geography, loan product types, or delinquency stages.
  • Segmenting can attract different buyer specialties and maximize the sale price.

3. Prepare Documentation:

  • Ensure all necessary paperwork, like the Purchase and Sale Agreement (PSA), is in order.
  • Prefer electronic storage of loan documents for quick buyer access post-purchase.

4. Complete Seller’s Questionnaire:

  • Fill out a questionnaire detailing the portfolio, including collection practices and payment histories.
  • Provide relevant information to help buyers evaluate the assets.

5. Market the Portfolio:

  • Work with intermediaries or directly approach potential buyers.
  • Target debt buyers, financial institutions, or other BHPH dealers interested in purchasing loan portfolios.

6. Negotiate and Finalize Sale:

  • Review offers and negotiate terms like pricing, representations and warranties, and post-closing obligations.
  • Finalize the sale by executing the PSA and transferring documents and data.

Benefits of Selling a BHPH Portfolio

  • Immediate Cash Flow: Selling the portfolio generates immediate funds that can be reinvested into the business.
  • Risk Transfer: The risk of defaults and delinquencies is transferred to the buyer, allowing the dealer to focus on core operations.
  • Business Expansion: Funds from the sale can be used for inventory, business expansion, or originating new loans.

By following these steps, BHPH dealers can effectively sell their portfolios and leverage the benefits of immediate cash flow and risk mitigation.

The primary motivation for BHPH dealers to sell their portfolios is to generate immediate cash flow, which can be reinvested into the business for inventory, expansion, or originating new loans. Selling also transfers the risk of defaults and delinquencies to the buyer, allowing the dealer to focus on core operations. 

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