By Amir Dabiri - August 12, 2020
The term Lease Here Pay Here (LHPH) is becoming a large trend in the Buy Here Pay Here world. The majority of dealers are noticing the benefits as it gives additional financing options to the buyer as well as being a tax benefit to the dealer. The first step when determining if Lease Here Pay Here is right for you is determining how it would impact your current books. The good news is, Deal Pack can handle it all.
There are 2 ways to account for Lease Here Pay Here deals on the books. The first being Operating Leasing which is where the asset, or vehicle, is being lent to the Lessee and no balance sheet entry is made nor does the Lessee book the depreciation. Operating Leasing companies have a leased inventory as an asset and the receivable is kept off of the Balance Sheet. On the other hand, the second way to account for LHPH is Capital Leasing. With Capital Leasing the receivable is kept on the balance sheet, the Lessee pays for the maintenance of the asset, and the Lessee books the depreciation.
Advantages of a Capital Lease:
Advantages of an Operating Lease:
Most Dealer Management Software (DMS) companies are not equipped to handle Lease Here Pay Here. However, with Deal Pack it is included at no extra cost and has automatic accounting integrated to work in real time. Interested in how Deal Pack can provide you a smooth transition into the LHPH world? Contact the support team toll free at 1(800) 526-5832 or send us an email at support@abcoa.com for a demo today!
ABCoA is a Software-as-a-Service company dedicated to the subprime industry. Our cloud-native ecosystem handles every part of business operations - improving productivity, security and accuracy, while consolidating vendors and reducing costs.
Since 1983, ABCoA has helped buy here pay here used car dealerships and subprime finance companies eliminate duplication, remain compliant, and achieve success with complete, customer-driven software and dependable support. Customers properly using Deal Pack have never lost an IRS audit.
Recently awarded Top Online Accounting Software for Deal Pack, ABCoA continuously elevates the standard for software in the subprime industry and helps customers grow through our commitment to quality, innovation, and service. Headquartered in Jacksonville, Florida with employees across four states, we remain family-owned and operated.
To learn more about ABCoA, visit www.abcoa.com.
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