According to the National Independent Automotive Dealer Associate (NIADA) average monthly car payments on new vehicles have reached the $700 mark and $570 for used vehicles. As vehicle prices remain uncertain, it will be important for dealers to get creative in ways to keep their customer payments affordable and realistic. Leasing can be an innovate option that meets the needs of both the customer and the dealer.
Lease-Here, Pay-Here on average can provide a customer with a monthly payment that is $100 less per month on the same vehicle compared to BHPH. This is possible without sacrificing profitability because leases have a residual value at the end of the term which creates what we call residual cash flow.
LHPH creates a more flexible environment for the customer as the term is usually shorter than a typical retail installment sales contract loan. The customer typically has a purchase option at the end of the lease (for a fee) or can upgrade to a newer nicer vehicle for their next lease, assuming they have made their payments and improved their credit. This creates flexibility for the customer and a customer retention program for the dealer.
The combination of affordability and flexibility give the dealer a competitive advantage that cannot compete with a retail installment sales contract. Want to learn more about LHPH? Download our E-book to learn about all the benefits used car leasing can provide your dealership!