Deal Pack Blog
Important reasons why your BHPH operation should start looking at leasing
The used car leasing industry is growing at a remarkable rate. More dealerships are quickly adding leasing to their already existing Buy Here Pay Here operation and some are just outright switching. Why? Because there are so many benefits that come along with leasing.
The first advantage to leasing your vehicles is the deferred sales tax. As each customer makes a payment on their lease, sales tax is collected on that payment. This means, if the customer doesn’t make a payment, you don’t pay taxes. What does this mean for you? It means better cash flow. No money in, no money out.
Another advantage of leasing is being able to depreciate your assets. This option of course is only available with operating leases where the dealership maintains ownership of their vehicles. In most cases, depreciation leads to a federal income tax deduction which is always a big plus!
Next on the list, there is currently less federal regulations with leasing. Lease Here Pay Here falls under Regulation M as opposed to Regulation Z in which auto sales fall under. Because leases do not have interest rates but instead have a rent charge, a dealer is not required to disclose an APR. Also, if a lessee defaults on his or her payments, repossession can be transacted with no waiting or “grace” period. On top of that, lessees cannot file for bankruptcy because they do not hold ownership of the vehicle.
Not only does leasing provide benefits to the dealership but to the consumers as well. Being able to pay less money up front allows the consumer to afford a nicer vehicle. Then, when their lease is up, they have options. The vehicle can be returned and another vehicle can be leased, or the vehicle can be purchased for its residual value (what the car is worth).
If you want to learn more about deciding if leasing is right for you, reach out to your state dealership association and feel free to call our Support Staff with questions as well @ 800-526-5832.