Capital for the LHPH Industry

Creating financial flexibility one dealer at a time

Converting from BHPH to LHPH

Kevin Londerholm  |  October 13, 2020

Thinking about switching from BHPH to LHPH?

Most are familiar with the Buy Here Pay Here (BHPH) business model where a dealership sells a vehicle to a consumer and provides the financing on a traditional retail installment sales contract (RISC) for a specific term and APR.  The dealer then services the installment loan through its life.

LHPH is similar to BHPH, however, the key difference with LHPH is that the financial instrument offered by the dealership is a used car lease rather than an installment loan.

Changing the approach from SELLING vehicles to LEASING vehicles may seem daunting at first, however, there are some key similarities between the two business models that make the conversion simple for the dealership staff & operations.

Watch below as Tim Lawrence, COO touches on many of these similarities.  The conversion from BHPH to LHPH is easier than you think!

LHPH vs BHPH with George Klinke

Kevin Londerholm  |  September 30, 2020

What is the difference between Lease-Here Pay-Here and Buy-Here Pay-Here?

Watch below as George Klinke, our EVP Business Development, clearly explains the different models for independent auto dealers to either SELL or LEASE their vehicles.

BHPH = Retail Installment Sales Contract, ownership of the vehicle is passed to the consumer

LHPH = Lease Agreement, the Dealer retains ownership of the vehicle while the customer makes a certain number of payments to use the vehicle

As George explains, the LHPH customer is given the option to either buy the vehicle at the end of their lease OR turn the vehicle back into the dealer and lease a different vehicle.  This flexibility in the LHPH Product is one of the many benefits both the dealer and the customer will get to experience with the Lease-Here Pay-Here model.

Contact us today if you would like to learn more about the LHPH Model! or 619-222-9990

BHPH to LHPH: Make the Switch!

Eyo Toe & Kevin Londerholm  |  September 14, 2020

Watch below as Terry Bowdler, Founder & CEO of LHPH Capital, explains the Sales Tax Advantage that LHPH has over the BHPH model.  With traditional Buy Here Pay Here lending on retail installment sales contracts (RISC), state sales tax is paid at the time of the transaction on the sales price of the vehicle. This means the dealer uses the entire down payment for sales tax and is immediately cash-negative at the inception of the deal.

For LHPH deals in “pay-as-you-go” states, the sales tax is calculated only on the actual monies collected by the dealer (i.e. down payment, first payment). Sales tax is then remitted to the state on each lessee payment received for the remainder of the lease. With this structure, the dealer can pay sales tax over time, rather than all up front. This helps dealers start loans on a cash positive basis, requiring less capital to growth the business as well as better unit economics throughout the life of the lease.

LHPH and BHPH Take Market Share in Subprime Market

Trevor Watson | September 8, 2020

Is your LHPH program prepared to capitalize on today’s market conditions?

According to Experian’s State of the Auto Finance Market for Q2, 2020, subprime loan originations fell to record lows as lenders mitigate risk in their portfolios by tightening credit standards in higher risk buckets. This leaves many consumers without traditional financing sources.

It also opens an opportunity for LHPH dealers to drift up the credit spectrum to capture more customers with higher quality than they have over the last decade. You can see the trend is just starting with BHPH gaining 90bps in market share over Q2 2019.

Contact us today to learn more about Lease-Here, Pay-Here and the LHPH Capital funding program.

Collections: Lessons from the Last Six Months

Trevor Watson | August 4, 2020

Collections and portfolio servicing have been a rollercoaster ride since the onset of the COVID-19 pandemic in March of this year.  The initial lockdowns, furloughs and layoffs resulted in widespread implementation of deferment programs and moratoriums on repossessions.  The emergency stimulus from the government threw lifelines to millions of consumers and staved off the expected surge in delinquency and defaults.  Only to be followed by additional pullbacks after an unsuccessful attempt at reopening.  Now the moratoriums are expiring, the enhanced unemployment has lapsed and is likely to come back in a reduced capacity, while the economy struggles to find its footing in a patchwork of federal, state and local responses.

Amidst all of this, LHPH dealers are trying to manage their portfolios in a responsible fashion while understanding and working through the challenges their customers have been faced with.  Bill Elizondo, COO at AFS Dealers, has compiled a list of best practices for LHPH and BHPH collections learned through the first six months of navigating these challenges.

You can find his recommendations in the most recent NVLA LeaseWire:

Agility, Technology, and Resilience in LHPH

Trevor Watson | July 22, 2020

A recent article on Auto Finance News, “Surviving Economic hairpin turns”, written by Shaimaa Elk, provides a succinct roadmap for subprime lenders navigating the unique circumstances brought on by the pandemic.

Lease-Here, Pay-Here dealerships are actually small community-based subprime lenders, not just car dealers.  They provide and service portfolios of affordable leases on reliable transportation to consumers who cannot qualify for traditional bank financing.  As such, LHPH dealers can find value in Shaimaa’s recommendations for subprime lenders.

While some of these recommendations may appear geared for larger financial institutions, many of these apply directly to LHPH dealer-lenders or can be modified slightly to be applicable.  One example is integrating better payment technology to make the transaction as simple and easy as possible for your lessees who may not maintain a traditional checking account.

Other ideas could include joining ComplyNet through NIADA to ensure regulatory compliance with all the changes we are likely to encounter at the local, state and federal levels throughout this recovery.  In addition, preparing your collectors for remote work is a wise precaution to address now to keep your payments coming in, in the event you need to vacate the dealership for a period.

The list of ideas to build agility and resilience in your LHPH operation is long, but the general concepts laid out by Shaimaa are a good guide to get you thinking down the right path.

Lease-Here, Pay-Here – Bankruptcy Remote

Trevor Watson | July 9, 2020

As the pandemic continues to impact people and the economy across the United States, it is reasonable to expect an uptick in consumer bankruptcy filings in the near future.  According to an article published by CNBC on July 8, 2020, 32% of households missed their housing payment for the month of July.  Unemployment claims continue to climb and the extra $600 unemployment payouts are set to expire at the end of the month.  Even if these are extended, they will not last forever and the continued increase in cases and rollbacks of re-openings likely indicates further distress in the future for the subprime consumer base BHPH and LHPH dealers service.

One of the many benefits of the product offered by Lease-Here, Pay-Here dealers 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.  The lessee must decide to either “accept” the lease and continue making the agreed upon payments, or “reject” the lease and return the vehicle to the lessor (the dealership).  There are no cramdowns available for Chapter 13’s or other headaches for the creditor typically associated with the bankruptcy process.

In today’s environment, migrating from the traditional BHPH model to the LHPH model continues to make even more sense.

Learn more about all the benefits of the LHPH model by downloading our FREE E-Book below.

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LHPH: Dealer Employee Buy-In

Kevin Londerholm  |  May 26, 2020

Used car leasing offers an answer to the challenge of affordability and performance.  Thanks to the incorporation of the residual value in the lease, a LHPH dealer can offer the same monthly payment on the lease of a vehicle with a $11,000 agreed upon value  as a BHPH dealer can offer on a vehicle with an $8,000 sales price.  Both deals provide the consumer the same monthly payment, down payment, and the same 36-month term.  However, the LHPH dealer can offer a newer vehicle, with lower miles, likely to last the entire term, and result in better portfolio performance over time.

Watch as Nick, our experienced LHPH Dealer, explains that after educating his staff on the benefits of the LHPH program for their customers, his employees truly bought into the in-house lease product.

Lease Here Pay Here Programs

Kevin Londerholm  |  May 18, 2020

Shifting to or launching a new LHPH program allows dealers to overcome the affordability gap for subprime customers, creates new profit centers, offers a superior competitive advantage, and allows the dealer principal to defer tax liability for years to come, among other benefits.  All thanks to the unique aspects of the lease.

See below as Stan, one of our top LHPH Dealers, describes how he decided that he wanted to be a LHPH Dealer and largely leave retail sales behind.


The LHPH Advantage

Kevin Londerholm  |  May 11, 2020

Making the switch from selling retail vehicles to creating an in-house leasing program is a big decision for an independent auto dealer.  After careful planning with their teams and discussions with their lender, each of our LHPH dealers adjusted their business models to offer their own lease-here pay-here program.  As Nick at Markosian Auto explains, the switch from selling retail to creating his own LHPH portfolio was the difference between achieving short-term profit vs. creating long-term wealth.

If you are a dealer interested in creating your own in-house used car leasing program, reach out to us ( (619) 222-9990 ext. 1010 ).  LHPH Capital can help offer suggestions on vendors, accounting firms, deal structure, and more!

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