Subprime bankruptcies, rising delinquencies hurt BHPH capital access

Buy here, pay here retailers are facing funding challenges in the wake of several subprime auto lender bankruptcies and rising auto delinquencies. However, they may find a solution in private credit. Many BHPH retailers relied on subprime lender Primalend Capital Partners to provide credit lines, Ryan Jones , owner of Fyffe, Ala.-based BHPH retailer Ace Auto Sales told Auto Finance News . Since Primalend’s Chapter 11 bankruptcy filing in October 2025 and subsequent restructuring, some retailers are struggling because the industry lost a major lender, he said. Primalend listed its estimated assets below $500 million , according to court documents it filed in the Northern District of Texas. Ace Auto Sales, which has a $3.5 million portfolio and sells 25 to 30 vehicles monthly, is looking for its first credit line and had initial discussions with five national lenders, Jones said. Only one, which he declined to name, said it was not providing funding to BHPH retailers right now, he said. However, several national and regional banks are effectively “on hiatus” when it comes to lending to dealers, Alan Keate , senior adviser at corporate finance adviser Lexant Advisors , told AFN . “Banks are very reluctant to lend into the space at this point,” he said. Rising defaults Some major lenders are hesitant to lend to dealers, and subprime lenders have tightened underwriting criteria for auto consumers in Illinois, Lisa Patterson , chief financial officer of East Dundee, Ill.-based BHPH retailer Drive Now Acceptance , told AFN . Both reactions come, in part, from rising default rates in Cook County, which includes Chicago, she said. “The default rate in Cook County … is so high, and you can’t redline. So it’s either you pull back on the whole state, or not,” she said. Business and consumer loan quality decreased slightly in the Federal Reserve Bank of Chicago ’s district, which includes Iowa, Indiana, Michigan, Wisconsin and most of Illinois, according to the March 4 edition of the Fed’s Beige Book , which captured economic data across 12 regions through Feb. 23. Drive Now Acceptance, which has a $33 million portfolio and sells around 140 vehicles monthly, does have a credit line with a bank, but that is because of its strong credit performance, Patterson said. Drive Now keeps loan terms to a maximum of 26 months and “will not approve a loan on a more expensive car if it doesn’t make sense” financially, she said. Private credit opportunity Primalend and subprime BHPH retailer Tricolor ’s Chapter 7 bankruptcy in September 2025 “have created anxiety” for traditional banks and credit unions looking to lend to retailers, Arturo Aguilar , president and founder of auto lender and BHPH adviser Auto One Acceptance , told AFN . JPMorgan Chase reported $170 million in charge-offs related to Tricolor , Fifth Third Bank estimated $ 200 million in provisions from Tricolor’s alleged fraud and Barclays reported a 110 million euro ($127.37 million) credit impairment charge from Tricolor . However, private credit companies are interested in funding subprime auto retailers and could bridge any gap left by major banks pulling back from loans to those retailers, he said. To assuage Tricolor-induced concerns, BHPH retailers should have third-party oversight or an audit process to verify the integrity of their loan data and originations, he said. That combined with accurate data that shows non-volatile credit performance will appeal to private investors seeking higher yields, Aguilar said. “If I know that your losses are going to be 20% no matter what, I know my returns as an investor,” he said. “The volatility of those losses is what scares me.” Auto One Acceptance launched a tool in November designed to advise and audit existing BHPH retailers and connect them with capital providers. If private credit does start regularly investing in buy here, pay here retailers and finds success, major banks and other lenders could return to market in one to two years, Aguilar said. “The banks will come back eventually,” he said. Auto Finance News will present multiple invaluable events for industry professionals in 2026, starting with Auto Finance Summit East and Auto Finance Capital Summit in May. To see event agendas and register, visit autofinance.live .

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Subprime bankruptcies, rising delinquencies hurt BHPH capital access

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