Lease Here Pay Here / Buy Here Pay Here – It’s a Game Changer in the Pay Here Market

white chess piece on top of chess board

The idea of both financing options, LHPH and BHPH, is to get a customer who would normally not qualify for conventional financing into a suitable vehicle.  Thus, the dealer avoids paying heavy fees and recourse to a finance company.  In both cases, it is the dealer that will be responsible for the sales, service, collections, and ultimately the success of its customers, though the bigger picture involves evaluating the potential for the profitability and success of these two options.

BHPH has been in the mainstream for over 40 years and has become an excellent revenue and profit source for independent and new car dealers alike. LHPH has been in the marketplace for the last 10 years or so, and with the change in tax laws in the Pay-As-You-Go states, it has become a game changer for this market.

Knowing the advantages and disadvantages that come with the LHPH and BHPH models is essential to understanding how either one might complement your business model.

Lease Here Pay Here is a true game changer in our growing industry and if done well can be extremely profitable. Like anything else that we view as a new idea, we research and ask questions and refer to resources. Utilize them and gather insight to determine if LHPH is right for you.

Following are advantages and disadvantages for both options and items to consider when implementing a LHPH or BHPH program.

Similarities between LHPH and BHPH:

  • Customer is financed in-house.
  • A subprime customer who normally is not able to obtain traditional financing is served.
  • The dealer’s underwriting system is utilized to decide whether to provide financing.
  • Collections are handled at the dealership or by a closely watched collection department or call center.
  • You control all aspects of the sale, collection, service, and profitability!

LHPH Competitive Advantages:

  • 31 states have Pay-As-You-Go benefits. This is a significant sales tax benefit, making the dealer cash flow positive at the inception of a deal in these states.
  • Cash flow is increased through tax deferral of sales tax payments.
  • You can sell a lower mileage, newer car to your customer, usually for the same price as a BHPH.
  • Customers can lease for a shorter term for the same payment.
  • A lease cannot be included in bankruptcy – equates to fewer losses because of bankruptcies. *
  • No redemption for a chapter 7
  • No reduction on a chapter 13
  • You own the car; thus, a repossession company has less hesitation securing vehicles. *
  • Consistent inventory – Dealer can keep hold of the vehicle once the lease matures.
  • No need to have a separate RFC.
  • Ability to depreciate your assets over time in your LHPH portfolio and report the losses on your federal income tax return in the form of a net operating loss (NOL).
  • The Graves Amendment – leasing companies shall not be held vicariously liable for the negligence of a driver using the leased vehicle.
  • For those who understand leasing, this familiarity is itself an advantage because you already understand how the concept works.

LHPH Advantages in Texas:

  • The dealer will pay the sales tax on only the ACV of the vehicle. This is only paid once
  • If the first lessee defaults after 12 months and the dealer re-lessees it, no tax is paid
  • When the dealer is done with the vehicle and decides to wholesale it, they will get a Sales Tax Credit for the amount they sell the vehicle for
  • Tax credits can be applied to future deals (within 18 months) to reduce or eliminate sales tax on future vehicle purchases
  • The sales tax can be added back into the lease
  • Lessees and LHPH Dealers pay less tax overall

LHPH Disadvantages:

  • Concept of the unknown: For those who do not understand leasing, it can be difficult to see the potential.
  • Lending choices are not as abundant.
  • Difficulty finding the right Dealer Management System that offers a compliant leasing module and collection technology together – There are but a handful that understand the LHPH model.
  • Leasing accounting is different than BHPH, so finding the right CPA or accounting firm is important.

BHPH Advantages:

  • This model has been around for 40+ years and is familiar to most dealers and customers.
  • Related Finance Company
    • It can separate some financial risks for the dealership.
    • Separates the “finance co” from the car dealership, typically with a different name.
    • Allows the finance company to buy the loan at a discounted rate, which creates some tax benefits.
  • Lending is more readily available from banks, finance companies, and investors.
  • There are more dealer management systems capable of doing BHPH support and service.

BHPH Disadvantages:

  • The market has become highly competitive, decreasing potential profits.
  • State sales tax is paid upfront for the price of the vehicle.
  • Down payments are lower because customers have more choices.
  • Terms are longer because the entire balance is financed.
  • Bankruptcy and repossession laws in most states limit your ability to negotiate a fair payment or balance or sometimes procure your asset in a timely manner.
  • Customer is savvier and can shop online to compare BHPH outfits against each other.

*Always check with your legal advisor or counsel before deciding to do any business.

-Bill Elizondo, October 16th, 2019


Over the past 30+ years, I’ve unfortunately conducted hundreds of exit interviews.  Surprisingly, compensation has rarely been a legitimate reason for leaving. According to Leigh Brahnam, author of the book “The 7 Hidden Reasons Employees Leave”, those reasons are:

  1.  The job or work place was not as expected
  2.  Mismatch between job and person
  3.  Too little coaching and feedback
  4.  Too few growth and advancement opportunities
  5.  Feeling devalued and unrecognized
  6.  Stress from overwork and work-life imbalance
  7.  Loss of trust and confidence in senior leaders

Have you ever considered the actual costs of hiring, training and retaining quality help?  An industry leader suggests the all-in costs of hiring and preparing a person to effectively manage a dealership is approximately $140,000.00 – 150,000.00, and approximately two years with the company working in various positions to learn the business and hone their skills.  

Suggestions to improve employee retention:

  1.  Be transparent.  During the interview process, paint the truest picture of the job and its requirements.  When a new hire realizes things are not as portrayed, doubt is created in the employee’s mind – “what else is wrong” or “what else are they lying about”.  
  2.  First rule of thumb, you will see the best side of people during an interview.  If you have a bad feeling, pass on the person or ask them to come back another time.  Assure the applicant has both the aptitude and attitude to be successful, or don’t hire them regardless.  Hire happy people. Hire people you would enjoy working for. Hire people who can one day replace you.
  3.  Coaching employees seems simple to me but is one of the greatest challenges I’ve witnessed among most managers.  Teaching a task, observing the student perform the task and offering feedback doesn’t seem so challenging to me. Maybe you don’t think it important, but your employees do.  They want to know how they are doing and what they must do to become better at their job.
  4.  Growth and advancement:  The number one reason people stay at companies has to do with developmental opportunities not how well they are paid.  Besides job enrichment, cross-training can increase the skill set and value of the employee, thus improving their preparedness for promotion.  
  5.  Folks want to work for a leader who recognizes their importance to the team regardless of position or responsibility and sincerely appreciates and acknowledges their contributions and accomplishments.  
  6.      Things have changed with the people we are hiring.  Work/life balance is far greater priority to employees today than ever before.  What is the culture at your company? Are you forcing employees to choose between having a career or having a life?
  7.  Inspire your employees by providing clear vision and purpose.  Empower them by delegating more responsibility and allowing them to do their job and more.  Demonstrate your trust and confidence in their ability to accomplish the goal, whatever it may be.  

A parting thought… Take a personal inventory of your leadership.  Identify the opportunities for improvement and establish a plan to reduce your turnover by becoming the best leader possible.  

-Bill Elizondo, February 1st, 2019

Customer Service

With more and more dealers vying for your customer’s business, it is mission critical that your dealership not only meet but exceed the expectations of your customer.  Some things are beyond your control, so it makes sense to focus your energies on the things you can control – the most important of which is customer service.  Below are some recommendations to help you improve your customer service.

  • Hire happy people who enjoy serving others. These front-line associates are usually the first person a potential customer will encounter.  As quickly as possible train them to be proficient at their job and capable of answering most questions your customer may have.
  • Make sure your front-line inventory is ready for sale – clean and mechanically sound.
  • Your greatest opportunity to give poor customer service is the use of “We Owe” agreements or agreeing to perform sale-contingent repairs after the customer takes delivery of the vehicle. Consider the following points:
    • When you sell a vehicle AS IS or with a limited warranty/service contract and agree to perform non-covered repairs after delivery, you have already compromised your loan closing process and set a precedent for the remainder of the contract. For example, telling your customer the vehicle is sold “as is”, but then agreeing to fix something after delivery is contradictory.  To which side do you think your customer will gravitate?
    • This practice also creates a myriad of opportunities for poor customer service such as the customer returning with a list of additional repairs; appointments made with shops but missed by the customer; or the repair(s) take longer than the repair shop originally promised. The list goes on.
    • My recommendation is to collect the down payment or take a security deposit to hold the vehicle until the sale-contingent repairs have been completed to the customer’s satisfaction and then consummate the deal and deliver the vehicle to the customer.
    • You might disagree with me because you are afraid of losing the sale. May I suggest that a customer unwilling to wait for a vehicle to be repaired prior to taking delivery may not be the type of customer you want on your books.
    • Anytime the opportunity presents itself, make sure you under-promise and over-deliver. I cannot stress enough the importance of doing everything possible to assure your customer is completely satisfied at the time of delivery.
  • Make sure your facility is always clean, organized and ready for business.
  • Secret Shop your own dealership(s) as well as your competitors. There is no need to hire a professional firm to do this. Save your money and train someone to do this for you. Find a friend or family member who can play the role of a potential buyer.  They need to objectively shop your dealership(s) as well as your competitors and provide feedback that identifies areas where your competition excels over your dealership.
  • Take some time to walk across the street and look hard at your dealership. Take an objective look at the things your business does well and identify opportunities to improve your customer service.

Most of your competitors have comparable inventory to yours.  Your opportunity to set yourself apart from the others is having the best ready-for-sale inventory and the best customer service in your community.

-Eddie Hight, November 23rd, 2018

Recipe: The Perfect Customer

It’s Summertime and everyone has the perfect dish. Whether it’s a mouthwatering hamburger, a fresh fruit bowl, or grilled bacon wrapped jalapeños, every picture you see on the cover of a magazine looks perfect. Although, I use all the same ingredients and follow the recipe precisely, my creations never look the same. Luckily, I am not cooking for a magazine cover. 

Here is a recipe that is perfect every time: The Perfect Customer!

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The Perfect Customer


– 1 quality used car purchased at a good price

– 1 brush, 1 towel, water and bucket of soapy water

–  3 large scoops of great customer service (meet and greet, test drive, identify their needs) 

– 1 term of making sure the payment is affordable for the customer

– 1 set of agreed upon expectations

– A handful of empathy


Take these ingredients and place them into your dealership, allow them to blend and stir them for the term of the contract. On occasion add in the empathy when necessary, laughing and genuinely smiling will also help. When the term is complete be prepared to hand the customers the title, the extra set of keys you made, and thank them for their business. If you feel you are still missing something you can always ask for referrals during and after they paid off your contract.  This is a great recipe for a successful customer. Enjoy and make as many as you can!

-Bill Elizondo, September 7th, 2018

Blogging is your VOICE!

I was asked to write a blog consistently for our website. Never knowing what it took to blog and what was expected I turned to the source that knows… the internet. It turns out that people have been writing blogs before it was ever called a blog.

Even though hieroglyphics (caveman blogs) have been around for millions of years it wasn’t until January 1994  Swarthmore student Justin Hall created the first blog ever, and in December 1997 online diarist Jorn Barger coins the term “Weblog” for “logging the Web.” Then Programmer Peter Merholz shortens “Weblog” to “blog” in April 1999 (from to become what we now call blogs.

Now it has become a valuable tool to tell a story, write about an experience, or tell someone about yourself. In some case some blogs are so popular they have been sold for millions of dollars. There are over 152 million blogs on almost any subject and some so obscure you would never have imagined someone would write about it.

So why blog for your business? Most businesses/corporations use it to talk about their products, their people, or in some case about their visions. Some individuals use it to tell their stories or to reach out to others that might want to learn about what someone went through in their life. A blog is an outlet and opportunity for someone you don’t know and might not ever meet to get to know you. Best of all it’s FREE and only takes minutes out of your day.

Like all of us every day we are one day older and hopefully one day wiser. Blogging is great for business and for you it’s the perfect way for someone to learn about you as a person, your vision, and hopefully what you can do to help someone become wiser and hopefully why they would want to do business with you. Do you have to blog every day? In my opinion no, but doing it once a week will keep people coming back to your website to see what’s new in your business or your life. Consistency is the key to create a following and you might be amazed as to how good it feels when you do write. Until next week. Enjoy!

-Bill Elizondo, August 24th, 2018