How Does LHPH Protect You and Your Assets?

Logan Sweeney | November 29, 2022


In today's competitive climate, owners in the Buy-Here, Pay-Here market are looking for ways to approve more customers. Rapid growth, on the other hand, hurts taxes and beginning capital. Inventory costs have consistently climbed over the preceding decade, but the increase has been much more significant in the last two years. The Lease-Here, Pay-Here business model has also gained traction during this time. The LHPH model is designed to provide consumers who would not otherwise qualify for regular bank and finance company lenders with a reliable method of transportation. One of the most important benefits of starting or switching to an LHPH program is that it allows dealers to bridge the affordability gap for subprime consumers while also opening up new profit areas. All of this is possible due to the lease's unique qualities.


Bankruptcy Remote

When a borrower declares bankruptcy, the customer has two options, accept the lease and continue making payments, or reject the lease and return the vehicle to the lessor (dealer). One of the many benefits of a Lease-Here, Pay-Here program is the bankruptcy remote nature of the lease.  Unlike the retail installment sales contract in Buy-Here, Pay-Here, a lease cannot be included in a BK. Collateral control is a common RISC when the lien holder on the installment loan is the dealer or their affiliated financing firm. Informing the right to cure, requiring notification of intent to sell, and waiting periods for reinstatement before repossessed property remains sold are some further constraints. If one takes out a traditional loan, the repossession procedure can take longer and cost more. Since they own the vehicle (the asset) and remain named on the title, dealers have much more rights to repossess their property under a lease. With a leasing program, repossession times remain shortened, and it is simpler to lease or sell the vehicle after a repossession. When it comes to consumer repossessions, it is essential always to seek the advice of the local council to ensure compliance with state and local laws. 

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