Lease Here Pay Here Success
Kevin Londerholm | June 18, 2020
The first question every dealer researching LHPH asks is, “can I make more money with LHPH?” The answer to that question is yes. There are numerous new profit opportunities that come with the implementation of a LHPH program.
With a Lease-Here Pay-Here deal, the dealer leases the vehicle to the first consumer and then services that lease through its term. The LHPH dealer makes the same profit as a BHPH dealer from the original mark up on the car and earns a rent factor on each payment equivalent to a similar interest rate on the BHPH note.
However, when the lease matures, the dealer still retains the vehicle (the asset) and can re-lease the same vehicle again, or sell it, without purchasing new inventory. When the vehicle is leased again, the dealer makes a profit on the markup a second time, as well as the rent factor on each payment (interest) from the new lease, creating a second stream of payments generated from the same asset.
Listen below to the high level of profitability that an Independent Auto Dealer can achieve through operating a LHPH Program: