Web site Helps Drivers Out of Auto Contracts
Allentown Morning Call
Web site helps drivers out of auto contracts
It matches people hoping to leave a lease with those wanting to take one over.
By Angela Tablac | Of McClatchy Newspapers
September 12, 2007
MIAMI - Sergio Stiberman got a hefty ultimatum when he wanted to break his Car Lease: Fork over more than $10,000, or wait out the 30-month deal.
He kept the gray BMW 740, but his frustration pushed him to look for simpler, cheaper ways to wiggle out of a contract. Within months in 1998, Stiberman created LeaseTrader.com, a Web site that matches people hoping to leave a lease with those wanting to take over one.
Leasing has become a more popular option in the past decade, and that increase has fueled online lease-swapping sites such as LeaseTrader.com, said Brian Moody, an auto industry analyst for Edmunds.com, a Web site on auto information. Leasing accounts for 20 percent of automotive sales each month, and leases across all vehicles rose 21 percent between December 2005 and December 2006, according to the Web site.
Many leases, Stiberman said, have two-year or more terms, and it's difficult for drivers to plot out their needs. But that's where LeaseTrader.com comes in, he added: to help drivers who get tired of their rented rides, have to downsize or move, and are saddled with several months left on their deals.
The Web site generated about 20,000 transactions last year; Stiberman estimated the number will hit 35,000 this year. He expects 2007 revenue to hit $8 million. LeaseTrader.com counts leaving a lease as one transaction and assuming a lease as another, even when they are part of the same lease transfer.
Here's how the site works: For $79, people looking to lose their leases can post information about the vehicles. Those searching for a car pay $39 for 60-day access to the site and must go through a credit check before contacting postings. Once a ''buyer'' finds a car and the deal is initiated, each side pays LeaseTrader.com $149.
''It's a good deal for a person looking to get out of a lease early,'' Moody said.
But Moody and Stiberman cautioned consumers to use due diligence when transferring or assuming a lease. Research the leasing companies, Moody said, because some still hold the original lessees liable for any damage the second driver does. Those taking over the lease, on the other hand, may be responsible for damage the first owner did and will ultimately be the ones to pay if mileage is more than the terms of the lease.
''You're not taking over a car from an entity,'' Stiberman added. ''You're taking over a car from an individual.''
Zinnia Santos has been a repeat user of the Web site. She tried to get a Chrysler Crossfire on LeaseTrader.com in May 2006, only to find out that Chrysler's leasing company didn't allow lease transfers. Less than a year later, she visited the swap Web site again.
''I wanted something within a few months, something less than a year…kind of like an extended rental,'' she said.
She had success this time. Within three weeks, Santos got the keys to a 2006 BMW Z4 convertible owned by Tamara Brenes. Brenes recently quit her job and needed to downsize from two cars. BMW would have broken her lease 12 months early, she said, but the time and process seemed too long.
''I would have had to sell the car back to them,'' said Brenes, who instead posted on LeaseTrader.com and got 10 responses in two days.
LeaseTrader.com isn't Stiberman's first entrepreneurial venture. He owned several consumer electronics stores in downtown Miami from 1986 to 1998. When the margin on the stores began to slip, he abandoned the business. Soon after, his experience searching for a way out of his lease led him to researching Internet lease-swapping and then starting his Web site.
But around the same time, other Web sites entered the market. Cincinnati-based Swapalease.com launched a similar service in 1999.
The idea came after Richard Joseph and his brothers, who own 15 dealerships with their father, had a series of customers hoping to break leases.
Their site, which has an inventory of about 8,000 vehicles, gives consumers something dealerships can't offer.
''A short-term lease usually has a very high payment,'' Joseph said. ''You now have a short-term lease with a low payment.''
He declined to give the number of transactions completed in 2006 and said revenue is expected to top $5 million this year.
But he did say that Swapalease.com competes with LeaseTrader.com.
Stiberman, on the other hand, said he's not concerned with the competition because Swapalease.com allows dealers to list cars. On LeaseTrader.com, only individuals are allowed to post. It creates more trust with consumers, said Stiberman, who added he and his wife have used the site for their own transfers.
To grow his business, Stiberman has relied on word-of-mouth to generate repeat customers and search-engine marketing to keep the Web site at the top of search hits.
Spokesman John Sternal said Stiberman's initial obstacle was changing the mind-set of the leasing companies, many which refused at first to allow transfers. But within two years, the company had approval from about 50 percent of the leasing companies and turned a profit, he added. Still, the company plans to grow slowly.
''We still have to let the industry catch up with us,'' Sternal said. ''We can't grow too fast, too soon.''
Upcoming expansions include blogs and video reviews.
Santos said she'd use the Web site again, and Brenes said last week that she plans to post an ad for her 2007 Volkswagen Passat lease.
''It was really easy the first time,'' she added. ''You really get rid of the car really quickly and easily.''
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This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com.
Print | posted on Wednesday, September 12, 2007 2:05 PM