Capital for the LHPH Industry

Creating financial flexibility one dealer at a time


Eyo Toe | June 9, 2021 

DEALER SPOTLIGHT: Learn about Nick Markosian’s journey of growing Markosian Auto and what made 2020 such a successful year of growth for his dealership.


How Does Depreciation Impact Taxable Income and Depreciation Payments?

Eyo Toe | June 8, 2021 

Chad Martin, CPA and Fractional CFO, answers how depreciations impacts taxable income and more. 


What Are the Sales Tax Advantages of Operating in a Pay-A-You-Go State

Eyo Toe | June 3, 2021

Pay-as-you-go sales tax is one of the major value adds of having a leasing program when you are located in a pay-as-you-go state. Typically, when using a Retail Installment Sales Contract (RISC) the dealer pays all of the sales tax up front, before the consumer has made any payments. Oftentimes, most if not all of the down payment will be allocated towards the upfront sales tax causing the dealer to be cash negative at the inception of the deal.

LHPH dealers* are able to pay sales tax with each payment the customer makes, allowing them to keep the entire down payment up front. This will create a positive cash flow up front especially when thinking about the impact of multiples leases per month.

Check out this map to find out if you operate in a pay-as-you-go state.

The Effects of Term Adjustment in a BHPH Loan vs. Lease

Eyo Toe | May 17, 2021

What are some solutions to the affordability aspect for dealers and consumers in today’s market? Check out this video explaining how leases can be structures to fit your unique customer base and dealership by comparing a BHPH loan to a LHPH lease.


Three Reasons Leasing Differentiates Your Dealership

Eyo Toe | May 12, 2021

Nick Markosian, CEO of Markosian Auto, talks about how leasing has elevated his dealership by increasing his average ACV, shortening terms, and newer model year. Nick explains some of the benefits of affordability and why it makes the LHPH model so appealing.


Affordability Is Driving Lease Programs

Eyo Toe | May 10, 2021

How can you keep your customer payment affordable as used car prices continue to increase? At first thought, the solution might be to extend the term. The infographic above shows what an extended term looks like in a Lease Contract versus a Retail Installment Sales Contract (RISC). Using the same IRIL or APR equivalent and vehicle retail value, the customer payment fluctuates depending on the length of the term.

A car of $14,000 value could be used for a 36 or 42 month term by adjusting the residual value to either 40% or 45% while maintain an affordable monthly payment for the customer. In order to get a payment similar to the 42 month lease ($404) the RISC would need a term of 54 months to get a similar payment ($403).

A Lease Contract is not only beneficial for your customer by providing a more affordable payment, but also for your dealership portfolio as shorter terms are associated with decreased delinquency, reduced charge-offs, and better overall performance.


Joe Segrave: The Dealer Perspective of Affordability

Eyo Toe | May 5, 2021

Joe Segrave, Founder of Benchmark Auto, speaks on his experience navigating the increase of used car prices and how it has affected his customers. Joe provides a dealer’s perspective on how the affordability benefit of LHPH has been exponential especially in the last year.


How Do New Car Prices Affect Subprime Affordability?

Eyo Toe | May 3, 2021

Last week Black Book reported yet another increase in their Weekly Wholesale Index up 1.60% from the previous week. Increased demand from consumers and low supply continue to be a challenge as wholesale prices rise and the new car supply continues its ongoing shortage.

In addition, Auto Finance News reported that Huntington Auto Finance experienced a 20% decline in floorplan assets during Q1 of 2021. With their portfolio consisting of mostly franchise floor plans, this gives insight to the domino effect of the lack of new car supply transitioning to used car supply for BHPH and LHPH dealers.

Analysts in the WSJ are predicting that the supply and demand will not balance out until the second half of 2022. What does this mean for dealers in the used car industry? Dealers will need to realize the most value out of their assets and find innovative ways to meet their customers’ needs. Subprime customers will be the most impacted consumer group as many require transportation for work and are not able to pay a higher car payment if prices continue to rise over the foreseeable future.

Affordability is a benefit for not only lease-here-pay-here dealers but for their consumers as well. In pay-as-you-go states, dealers are able to keep the entire down payment rather than pay sales tax on the full sales price upfront, allowing them to reinvest that money into additional cars or reconditioning. Those vehicles can also be leased two to three full-term leases before cashing it in for its residual value.

Leasing can also take the burden of increased car prices off of your customer when they lease a vehicle. Because many of the lease variables are adjustable and includes a residual, the customer payment can stay at an affordable level as the uncertainty of 2021-2022 car prices continue.


LHPH E-book 2021 Edition

Eyo Toe | April 6, 2021

LHPH Capital has updated our E-book with industry benchmarks, dealer resources for a successful LHPH program, and more! Our E-book is a great resource when learning about the benefits of leasing and how to make a leasing program best fit your specific needs at your dealership. Find the link to the FREE download here!

How Are Used Car Price Increases Affecting Dealerships?

Eyo Toe | March 15, 2021


Manheim posted an update on used car prices this week. Their Vehicle Value Index reports that the used vehicle market continues to be competitive as prices soar YOY and even from the previous month. Manheim reports that in February, the used car value index increased 17.9% YOY and 3.79% from January.

How do dealers combat the challenges of increasing used car prices and the affordability aspect for their subprime customers? There are a few options when looking at the long-term effects of increased car prices.

One option is to extend the term of the retail installment sales contract in order to sustain an affordable monthly payment for the consumer. Although this may seem like a quick fix, historically data has shown that a longer term is correlated with increased delinquency and charge offs. When planning for the long-term financial health of your dealership, extending the average term of your notes is risky and could have negative effects on the financial performance of the dealer’s portfolio.

Another option to consider is adopting a leasing program. Leasing is incredibly resilient in a fluid market like the used car industry because it allows the dealer to adjust the many variables of a lease contract including, but not limited to, the agree upon value, interest rate implicit in the lease, residual value, acquisition fees, and more. This flexibility allows you to customize a lease contract for your customer even as used car prices increase without lengthening the term.

LHPH programs are encompassed around the fact that consumer affordability is directly related to dealer profitability. When you are offering your customer a newer, more reliable car for a payment they can afford, it is more likely your customer will successfully complete their lease and you will retain their business for future vehicle leases.

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