As vehicle financing continues to evolve, auto dealerships face growing challenges from one major factor: rising auto insurance premiums. For Buy Here Pay Here (BHPH) and Lease Here Pay Here (LHPH) dealers, understanding the link between insurance, affordability, and loan structure is key to staying competitive in 2025.

At Dealer Controlled Solutions (DCS), we empower dealers to navigate these shifts with smart tools that enhance transparency, improve insurance compliance, and support customer-focused financing.

The Impact of Rising Insurance Costs on Auto Financing

Auto insurance rates are climbing due to several factors:

• Increasing vehicle repair costs
• Climate-related damage (e.g., floods, wildfires)
• General inflation and regional underwriting adjustments

According to industry insights, these rising premiums directly impact a vehicle’s total cost of ownership (TCO)—a major concern for both subprime lenders and in-house financing dealers.

For many consumers, insurance costs are now a make-or-break factor in their ability to qualify for auto financing. This is especially critical in LHPH and BHPH models, where dealerships extend credit internally and bear the financial risk of customer defaults.

Insurance as a Key Factor in Loan Approvals

Traditional and subprime lenders alike now evaluate insurance affordability alongside income, credit history, and down payment. A high insurance premium can:

• Reduce a buyer’s loan eligibility
• Trigger higher interest rates or shorter terms
• Lead to deal denials, especially for subprime customers

Dealerships offering in-house financing must now educate customers about how insurance affects approval—and proactively guide them toward vehicles with lower premium profiles.

Educating Buyers About Total Cost of Ownership (TCO)

Dealerships are in a strong position to help consumers understand the full TCO, which includes:

• Monthly loan or lease payments
• Maintenance
• Fuel efficiency
• Auto insurance premiums

Highlighting vehicles with strong safety ratings, built-in telematics, or proven reliability can make a difference. These features often lead to lower insurance costs, improving loan approval odds and overall affordability.

Meeting Evolving Consumer Expectations with Integrated Insurance Options

Modern car buyers expect convenience, customization, and seamless digital experiences. By offering insurance solutions at the point of sale, dealers can enhance trust, boost satisfaction, and increase deal closure rates.

For example, LHPH/BHPH dealerships can partner with providers to:

• Bundle insurance with financing packages
• Offer real-time insurance quotes
• Help buyers select coverage based on budget and driving habits

How Dealer Controlled Solutions (DCS) Helps

At DCS, we provide dealerships with tools to reduce risk and optimize insurance-related workflows—all while keeping compliance and customer service front and center.

Insurance Verification with Verifacto Integration

We integrate seamlessly with Verifacto, enabling:

• Real-time tracking of active coverage
• Alerts for lapsed or insufficient insurance
• Centralized documentation for compliance audits

This is essential for BHPH and LHPH dealers who need to protect their portfolio from uninsured losses.

Technology to Lower Customer Insurance Costs

Our DMS platform supports integrations that help:

• Match buyers with affordable insurance based on behavior and risk profile
• Leverage telematics and credit-based underwriting
• Offer personalized insurance bundles that improve payment performance and customer satisfaction

Tools Built for LHPH and BHPH Dealers

Rising insurance costs can complicate deal structuring in in-house financing models. Our tools help dealers:

• Present realistic payment scenarios that include insurance estimates
• Adjust down payments or lease terms to balance risk
• Track premium trends across geographic areas to optimize inventory and offer guidance

Final Thoughts: Adaptation Is the Advantage

Insurance isn’t just an external factor—it’s now a critical part of the vehicle financing strategy. By accounting for rising premiums, educating buyers on TCO, and integrating with tools like Verifacto, dealerships can build stronger, more profitable portfolios in 2025.

Learn how DCS can help your dealership reduce risk, improve insurance tracking, and adapt your BHPH/LHPH models to today’s market realities.