Capital for the LHPH Industry

Creating financial flexibility one dealer at a time

What is the FDCPA?

Eyo Toe | April 7, 2021

As a dealer, there are regulations in place about how to contact consumers which is what the Fair Debt Collection Practices Act (FDCPA) encompasses. Ed Kaye, Schickler & Kaye LLP, explains what the FDCPA is and why you should be informed about it.


Does BHPH and LHPH Fall Under the Same Compliance Regulations?

Eyo Toe | April 5, 2021

In short, LHPH and BHPH do not fall under the same regulatory standards. If you are a BHPH dealer, you are probably familiar with Regulation Z, but leasing falls under a standard called Regulation M.

Regulation M was created under the Federal Consumer Lending Act and covers topics such as general disclosure requirements, renegotiations and extensions, purchase option disclosures, advertising, and more. Its purpose is to provide minimum requirements to help protect consumers when signing a lease. The document itself is very detailed in explaining the regulations of leasing whether it is addressing how lessors can communicate with consumers (phone, social media, text, email, etc.), how often they can contact them, or defining lease specific terms.

Although Reg M is a federal regulation, be sure to stay up to date with your local laws as each state has its own regulatory standards when it comes to leasing. This will ensure your compliance on all levels.

Here is a link to read though the details of Reg M.  If you want to offer leasing at your dealership, understanding Reg M is the place to start.

Our E-book is also a great resource in directly comparing the vocabulary used in Reg M to Reg Z.

Have additional questions? Contact Trevor Watson at TWatson@LHPH.com.


Consumer Leasing During COVID

Kevin Londerholm  |  August 18, 2020

The Consumer Leasing Act (CLA) was passed in 1976 to assure that accurate disclosure of lease terms is provided to consumers before entering into a contract.  With this information, consumers can compare one lease with another, as well as compare the cost of leasing with the cost of buying on credit or the opportunity cost of paying cash.  Additionally, the CLA puts limits on balloon payments due at the end of a lease, and regulates advertising.

For consumers searching for their own transportation solution, leasing is an alternative to buying either with cash or on credit.  A lease is a contract between a lessor and a lessee for the use of property subject to stated terms for a specified period and at a specified payment.  Due to the residual value built into the lease, the consumer is often able to lease a newer, nicer car when compared to traditional vehicle financing.

During these times of economic uncertainty due to the COVID pandemic, our LHPH Dealers offer flexible used car leasing as an alternative to traditional vehicle financing.  Watch the video below of Tom Buiteweg, Attorney at Hudson Cook, LLP, who discusses the basics of Regulation M, governing consumer leasing under the Consumer Leasing Act.

Understanding the leasing basics is the first step in developing your own Lease Here Pay Here Program.  Contact us if you would like to discuss consumer leasing!


Reg M: Consumer Leasing

Kevin Londerholm  |  July 16, 2020

Before you launch your LHPH program, it is imperative that you become familiar with Regulation M: Consumer Leasing, it is to LHPH what Reg Z is to BHPH.  Here is a link to the regulation and commentary on compliance.

www.dealerdeskbook.com/resources/regmandcommentary/

In addition to Reg M, every state will have its own regulations revolving around the lease product.  You should always engage your own legal counsel to ensure you build and maintain your operation in compliance with Reg M and your state and local laws.

Watch below as Tom Buiteweg, Partner at Hudson Cook, explains Reg M and Consumer Leasing at our LHPH Summit in 2019:


LHPH: Insurance & Liability

Kevin Londerholm  |  May 30, 2020

Mike North, accountant at Katz, Sapper & Miller, stated at the LHPH Summit in 2019 that after discussing the sales tax advantage, dealers want to discuss insurance requirements and liability regarding a Lease-Here Pay-Here program.

Virtually all States require the buyer/lessee to have full coverage, or at least State Minimum Financial Responsibility Limits (liability), to finance or lease a vehicle.  These state minimum coverages can vary substantially by state.  In addition, the lease agreement the lessee signs may require greater coverage than the state minimum car insurance requirements. It is important to be aware of both, so the lessee and lessor are compliant with state regulations and with the lease agreement.

In 2005, President George W. Bush signed into law the Transportation Equity Act of 2005, a comprehensive transportation bill which included the Graves Amendment.  This amendment relieved rental car companies and lessors of vicarious liability which before, meant the renters and lessors could be held liable for the negligent acts of a driver who was using the vehicle.  The Graves Amendment declares that leasing companies shall not be held vicariously liable under any State law for damages sustained in a motor vehicle accident.

There are a handful of states that may require additional due diligence on the part of the lessor.  Always consult your legal counsel to identify any state-specific insurance regulations that may apply.  Reach out to LHPH if you have any Lease-Here Pay-Here questions!


Dealer Resources for COVID-19 Pandemic

Trevor Watson | April 6, 2020

The National Independent Automotive Dealer Association (NIADA) has compiled an excellent resource page for dealerships trying to navigate the COVID-19 pandemic.  Visit their site for more information regarding:

  • CARES Act
  • Payment Protection Program application
  • SBA Economic Injury loans
  • State specific information
  • Vendor contact information

Access it here: https://info.niada.com/en-us/covid19


Understanding Lease-Here, Pay-Here

By: Trevor Watson   August 1, 2019

Lease-Here, Pay-Here as a method of financing subprime customers is not a new product, however, the prevalence of the Buy-Here, Pay-Here model in dealerships throughout the country means LHPH is not nearly as well understood as BHPH.  This results in a number of misunderstandings about LHPH due to a general lack of easily available information. 

For instance, a common concern you will hear dealers raise when talking about LHPH is the risk of vicarious liability and the cost of insurance to mitigate the risk.  While that was a challenge for LHPH dealers at one time, in 2005 Congress passed the Graves Amendment that effectively bars vicarious liability claims against lessors, unless it can be proven the lessor was truly negligent.  There has yet to be a successful claim against a lessor since the Graves Amendment was enacted. 

While the Graves Amendment is a federal law applicable to all of the United States, on a more regional level, many dealers in Texas have long believed the Sales Tax benefits of Buy-Here, Pay-Here were superior to those of Lease-Here, Pay-here in Texas.  This is another misunderstanding of LHPH and how Sales Tax actually works on a lease in the state of Texas.  Read this article below to learn more about how the process actually works, and how you can make your cars more affordable to your customers while building sales tax credits for your dealership through LHPH in The Lone Star State.   

Check out the link to the article below:  

http://digital.subprimenews.com/publication/frame.php?i=604310&p=28&pn=&ver=html5

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