Lease Here Pay Here – What can it do for your Business?

The idea of Lease Here Pay Here is a newer model that traditional Buy Here Pay Here (BHPH) Dealerships are catching onto. There are multiple benefits to taking on a Lease Here Pay Here (LHPH) model but let us go over three bigger ones to consider if you are beginning to consider adding a LHPH piece to your business.

The first benefit, and probably the biggest advantage: Profitability.

With a traditional BHPH car, you are looking at one vehicle, one customer, one time. Your profit comes from whatever the original markup of the vehicle is plus the interest received over the life of the loan. If you were to lease this vehicle instead of selling it, you are looking at roughly the same amount you would be collecting in interest on the loan, but this is collected as a rent factor on each payment. The additional difference here is that when the lease matures, you now have another vehicle on your lot to lease or sell, without needing to purchase new inventory.

There are many other profitable items that go into LHPH but let us move to our second benefit: The Competitive Advantage.

Imagine you are a credit challenged consumer. If you had the option to either purchase an 8–10-year-old vehicle with high mileage, or a 2-year-old vehicle for the same payment amount, which would you choose? With the average consumer becoming more tech-savvy by the day, it is much easier for them to compare vehicles and pricing online without ever stepping foot in a dealership. When customers come to this realization on their own, more and more of them will flock your way.

The final benefit I will mention today: Customer Retention.

A traditional Buy Here Pay Here deal involves selling a vehicle, then servicing the loan through the end of the term. For the most part, that is the extent of contact with the customer. The customer can pay the vehicle off, then its up to them if they would like to purchase their next car with your dealership or go to one of your competitors. With a Lease Here Pay Here model, the customer will be back in the dealership in one fashion or another. You will have the option to get the customer into another lease or sell them the previously leased vehicle for the residual value. Knowing that contact will be made at the end of the lease can lead to profits you may not have to receive with following the BHPH model.

If you are toying with the idea of bringing the LHPH model to your dealership, it is vital that you have the software to help make the transition as seamless as possible. Taking on a new Dealer Management System such as Deal Pack, which easily integrates LHPH as well as the traditional BHPH model, can be the perfect tool for this transition.

If you would like additional information about Deal Pack or would like to request a demo, reach out to our support line at (800) 526-5832 or Support@abcoa.com.