The recent implementation of a 25% tariff on imported vehicles and parts by the Trump administration has significantly impacted the automotive market, leading to increased prices for both new and used cars. This surge in costs presents challenges for consumers seeking affordable transportation options. However, Lease-Here-Pay-Here (LHPH) programs offer a viable solution to maintain manageable payments during these financially strenuous times.

Understanding the Impact of Tariffs on Vehicle Prices

The newly imposed tariffs have led to substantial price increases across the automotive sector. Analysts predict that vehicle prices could rise by $5,000 to $10,000, with some models, particularly electric SUVs, experiencing hikes up to $12,000. This escalation exacerbates the existing affordability crisis, as the average new car price had already surpassed $48,000 prior to the tariffs.

Used car prices are also feeling the ripple effects. As consumers priced out of the new car market shift to used options, demand has surged—tightening inventory and driving prices higher, especially for later-model vehicles.

How LHPH Programs Enhance Affordability

LHPH provides an alternative to traditional financing models, especially in today’s environment, where credit-challenged customers are now competing with more qualified buyers who’ve been priced out of the new vehicle market. By leveraging the vehicle’s residual value at lease-end, LHPH structures monthly payments that are typically lower than a conventional retail installment sales contract (RISC), keeping vehicles within reach for a broader segment of drivers.

Benefits of LHPH in the Current Economic Climate

1. Lower Monthly Payments: By accounting for the vehicle's residual value, LHPH programs can offer lower monthly payments compared to traditional financing methods. This structure enables consumers to afford vehicles that might otherwise be out of reach. This structure enables consumers to afford vehicles that might otherwise be out of reach without extending term and injecting additional risk into your portfolio.
2. Flexibility: LHPH agreements often come with flexible terms, accommodating consumers' varying financial situations and providing options that align with their budgets.
3. Boost Customer Retention:
   By offering dependable transportation and a more flexible path to ownership, dealers build stronger relationships with customers. The result? Higher satisfaction, greater loyalty, and increased repeat business when lease terms end or customers are ready to upgrade.

Conclusion

The recent tariffs have undeniably intensified the challenges of vehicle affordability. However, LHPH programs present a strategic alternative for customers to maintain consumer affordability and access reliable transportation. With lower payments, better vehicle options, and stronger long-term relationships, LHPH helps drivers stay on the road without breaking their budget—and helps dealers succeed despite market volatility.