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How to Get Started with Lease Here Pay Here

December 23rd, 2022

Lease here pay here (LHPH) is a type of car financing option that allows customers to lease a vehicle and make payments every month, similar to a traditional car lease. However, LHPH dealerships often cater to customers with less-than-perfect credit who may not qualify for traditional financing options.

In a LHPH arrangement, the customer leases the vehicle from the dealership and makes payments directly to the dealership rather than a bank or other financial institution. The dealership may require a down payment and charge a higher interest rate than traditional leases. One of the main benefits of LHPH for customers is that it can provide an opportunity to rebuild credit. By making timely payments to the dealership, the customer can demonstrate their creditworthiness and qualify for better financing options. However, LHPH can be more expensive for customers than traditional leases or loans. The higher interest rates and fees charged by LHPH dealerships can result in higher overall costs for the customer.

In addition, LHPH agreements often have stricter terms and conditions than traditional leases, such as stricter mileage limits and rules for returning the vehicle. For dealerships, LHPH can be a lucrative business model. By catering to customers with less-than-perfect credit, dealerships can tap into a market that may not have access to traditional financing options. LHPH dealerships may also be able to charge higher interest rates and fees compared to traditional lenders, resulting in higher profits. However, LHPH dealerships must also be mindful of regulatory requirements.

LHPH dealerships may be subject to additional licensing or bonding requirements in some states. In addition, LHPH dealerships must be careful to comply with all relevant consumer protection laws, such as the Truth in Lending Act, which requires lenders to disclose the terms and conditions of loans to consumers.

One potential concern with LHPH is the risk of default. If a customer cannot make their payments, the dealership may be forced to repossess the vehicle, which can be costly and time-consuming. LHPH dealerships may require a higher down payment and impose stricter lease terms and conditions to mitigate this risk.

Overall, LHPH can be a valuable option for customers with less-than-perfect credit who are looking for a way to finance a vehicle. However, it's essential for both customers and dealerships to carefully consider the costs and risks associated with LHPH agreements. Customers should be sure to understand the terms and conditions of their leases and be prepared to make timely payments, while dealerships should ensure compliance with all relevant regulations and make sure to provide clear and transparent terms to customers.

Joshua Aaron
By Joshua Aaron - December 23rd, 2022