Lease-Here, Pay-Here in Used Car News
Eyo Toe | August 8, 2023
Used Car news recently did a piece on the Lease-Here, Pay-Here session at the 2023 NIADA Convention. Here are 4 key points from the article:
Insights from Dealers: Mississippi dealer Stan Sumrall and Arkansas dealer Dustin Kerr shared insights into the lease-here, pay-here (LHPH) market and discussed their experiences and observations about LHPH and its advantages over traditional buy-here, pay-here (BHPH) models.
Lease Structure and Benchmarks: Trevor Watson, VP of business Development at LHPH Capital, shared a comparison of lHPH benchmarks from 2019 to 2022 including average ACV, down payment, term, and residual value.
Flexibility and Resilience of LHPH: LHPH offers flexibility in adjusting the residual value, which impacts the customer's payment. This flexibility is likened to leasing a new car, allowing dealers to offer more expensive vehicles with lower payments on shorter terms. Both Sumrall and Kerr agreed that LHPH has added resilience to their businesses, as they can control their fate and adjust contracts as needed during market disruptions.
Tax Advantages and Income Tax: Tax advantages were highlighted as a significant bonus in LHPH. Dealers can spread out sales tax payments over time, reducing upfront costs for dealers in pay-as-you-go states. Additionally, accelerated depreciation on leases can significantly reduce income tax burdens, allowing for more favorable financial outcomes for dealers.