For many consumers, owning a reliable vehicle has become increasingly difficult due to rising car prices and tightening credit conditions. In the past decade, both new and used vehicle prices have surged, putting financial strain on consumers—especially those with lower credit scores. For Buy Here Pay Here (BHPH) dealers, balancing affordability with profitability has never been more challenging.

This is where Lease Here Pay Here (LHPH) presents a compelling solution. By leveraging a leasing structure, dealerships can offer more affordable monthly payments, provide better vehicles, and improve overall portfolio performance—all while maintaining strong profitability.

The Affordability Challenge in the Used Car Market

The rise in vehicle prices has been significant:

• In 2010, the average price of a new car was $29,217; by 2023, that number had climbed to $48,681.
• Used car prices have followed the same trend, jumping from $17,000 in 2010 to $29,300 in 2023.

How LHPH Provides a More Affordable Alternative

Rather than financing a vehicle purchase through a traditional installment contract, LHPH allows dealers to structure used vehicle leases that reduce monthly payments. The key difference? The lease structure incorporates a residual value, meaning the customer pays for the expected depreciation of the vehicle rather than its full purchase price.

Let’s compare a typical BHPH loan vs. an LHPH lease on a $13,000 vehicle:

• BHPH Loan: With a 36-month term and 25.99% APR, the customer might face payments exceeding $600 per month—often an unsustainable amount for credit-challenged buyers.
• LHPH Lease: By factoring in a residual value, the same vehicle could have a monthly payment well below $600, making it far more manageable for the consumer while improving performance for the dealer.

Looking Ahead: The Future of Affordability

As vehicle prices remain high, subprime consumers will continue to struggle with affordability. LHPH offers a sustainable alternative that benefits both dealers and customers—bridging the affordability gap while maximizing profitability.

If you're a dealer looking to explore LHPH as a solution for your business, now is the time to consider how this model can enhance your operation.