Two Ways to Unload Your auto lease
By Christopher Sahl
TheStreet.com Staff Reporter
11/20/2007
The following story was also posted online at www.leasetrader.com.
Sometimes life gets in the way of your Car Lease.
Maybe you've been transferred to a job in another country. Or a leased car is included in the estate of a recently deceased relative. Sometimes all it takes is sheer boredom with the car.
Whatever the reason, the Car Lease that's become an intolerable burden might be exactly what someone else is looking for.
That's the thinking behind companies like Leasetrader.com and Swapalease.com, which bring leaseholders and prospective buyers together online in a low-pressure environment.
Think of these sites as an eBay for swapping auto leases. Unlike the intimidating "hard-sell" approach you encounter in a car dealership, both the buyers and sellers who use these sites are in an advantageous position.
Both Swapalease and LeaseTrader allow visitors to browse their virtual showrooms without registering. But prospective buyers must submit to a credit check before contacting sellers.
"We certainly don't want to waste any of our sellers' times," says LeaseTrader spokesman John Sternal. "We want them to know that if they come into contact with a buyer that they have the credit to be able to take over their lease."
What It Costs
LeaseTrader charges prospective buyers $39 and gives them up to two months to contact as many sellers as they want. That cost also covers a credit check. Sellers must pay a $79 advertising fee to list a car, a one-time payment that's good until the seller finds somebody to take over the lease.
When a match is found, the transaction is assigned to an account representative who assists both sides through every facet of the deal. The company charges both seller and buyer a $149 transfer fee. Sternal says that the entire transfer process takes, on average, three weeks.
The two parties are also responsible for the fee from the finance company that holds the lease, which can range from $50 to $550, according to Sternal.
Swapalease charges sellers a $49.95 listing fee when their vehicle is posted to the site. Once a transfer agreement is reached, they pay a $95 "success fee."
The cost for buyers to register ranges from $34.95 to $79.95. This fee includes access to seller contact information, a personal buyer "mailbox" for all related communication, and customer assistance from Swapalease through every step of the transfer.
When Sean Gill's wife became pregnant with their third child, he reconciled himself to the fact that his BMW X5 had become too small for the family. He was only one year into its lease.
No stranger to the online car market, Gill has sold cars through ebaymotors, craigslist.org, cars.com, autotrader.com and other sites. But Swapalease, he says, led to a "higher percentage of serious, and probably qualified, parties."
Gill says his car moved quickly, as his presentation was honed by his experience in the online marketplace. It included an explanation of why he wanted to exit the lease. He says photos, including interior and exterior shots, are critical to getting traffic to your ad. It's also helpful to research comparable cars on the site to keep expectations reasonable.
"I think my vehicle went quickly because my payment was relatively low and I also offered an incentive to get the job done quickly," Gill says. "It seems that a lot of the vehicles listed on the site were people trying to get out of bad leases with excessively high payments or were at risk of going over the miles on their leases."
Gill paid $1,000 to the person who assumed his lease, considerably less than the $5,400 that he would have had to pay BMW to get out of it early.
Gill recommends that sellers be diligent in screening potential buyers. Make sure that they will take the necessary steps to complete the transaction in a reasonable amount of time. New lessees are responsible for getting insurance, informing the DMV of the ownership change and following up with buyer's former leasing company.
The service is catching on. LeaseTrader handled 20,000 transactions in 2006, and is on pace to handle nearly 35,000 this year. Swapalease has transferred more than $400 million in leases since it began in 1999.
"When we first started, industry analysts warned us that there are always more cars available than people who want to take them over," Sternal says. "Today we've got four-times as many buyers as sellers. It's always been skewed more towards buyers than sellers."
That makes sense when you consider what a strong bargaining position people taking over leases have. The seller may include a cash incentive, as Gill did. Also, the initial lease may have been originated when more favorable terms were available.
And if you're looking for a lease shorter than the standard three- to four-year period, you can always get more favorable terms by taking over a pre-existing lease than assuming a new short-term lease.
That doesn't mean every deal is a good one. Chuck Norlin, creator of thebestdealofyourlife.com and a 28-year veteran of the retail auto industry, says it's possible to find a wide variety of incentives, lease payments, residual and terms, not to mention mileage and condition, on similar vehicles.
Prices can vary due to differences in equipment and model, or simply because leases were generated at different times with or without a down payment. For example, LeaseTrader recently listed 11 2006 BMW M5 sedans with monthly payments ranging from $1,200 to $2,215 and remaining term lengths from eight months to 32 months.
Ultimately, he says, sites like these are a great tool for finding a vehicle. But finding the best deal is up to you.
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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 Tuesday, November 20, 2007 7:31 PM