Capital for the LHPH Industry

Creating financial flexibility one dealer at a time

Lease Here Pay Here – Average Deal

Kevin Londerholm  |  March 2, 2020

At our LHPH Summit in 2019, our VP of Business Development, Trevor Watson, asked our experienced LHPH Dealers what their average lease deal looks like.  The deal structure (term and agreed upon value) is generally based off of the purchase price of the inventory.  As our dealer panel explains, inventory for a Lease-Here Pay-Here Dealer can differ from a BHPH dealer’s inventory due to getting multiple turns on a single vehicle.  This results in vehicles with a higher Actual Cash Value (ACV) purchased from an auction mixed in the lot inventory with vehicles that have been returned to the dealership after a successful lease transaction with a slightly lower value:

  1. Higher ACV: New inventory that has been purchased from the auction may have a term of up to 36 months and may cost the dealer up to $9,000 initially.
  2. Lower ACV: A vehicle that has successfully run the term with an original lessee is returned back to the dealership, reconditioned, and re-leased to another customer.  The second or third lease on the same vehicle would most likely have a shorter term with a lower agreed upon value.

Whether the vehicle is new to the lot or it is recycled inventory, the goal for our LHPH dealers is to lease vehicles to their customers that will successfully run the length of the lease term.  Check out the video of our dealers explaining their deal structure below:

 

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