Lose That Car Lease
Terry Savage
03/13/06 - 10:34 AM EST
You leased a car, and now you hate it. Or you can't afford it. Or you just found the car of your dreams, but your current car lease runs for two more years. That's the great disadvantage of leasing a car: You're stuck.
At least, you
were stuck, until two online companies came along to provide a marketplace to help people get out of their car leases.
LeaseTrader.com and
SwapaLease.com provide that auto-lease marketplace for a fee, helping people get out of existing leases. On the other side of the transaction, people looking for a shorter-term lease, with no down payment, can find good deals by picking up the balance of an existing lease.
It's a fast-growing business. SwapaLease.com says it completed 6,000 lease-transfer transactions in 2005, and it expects that to grow to 10,000 in 2006. Scot Hall, director of lease operations, says his site has about 5,000 cars listed at any given moment.
LeaseTrader.com says it had more than 20,000 lease-transfer transactions in 2005, and it's expecting volume to triple this year. It usually has about 20,000 cars listed on its site, according to Chief Executive Sergio Stiberman.
How It Works
The two companies have similar models, though they provide slightly different services and charge different fees.
The sites work something like a dating service. Those looking for a lease can search for free on either site. You can search in multiple ways, such as by model, dollar amount of the lease or geographic location. Once you've found a car and want to contact the seller of the lease, you'll have to pay a "buyer's fee" to get the contact information for the seller.
SwapaLease creates several different packages for sellers. At its most basic level, you can list a car for $49.95 and then pay a one-time fee of $95 if a lease-transfer deal is consummated. Or you can simply pay a one-time fee of $99 for a club membership. There also is a "gold" listing, with more exposure through banner ads, for $149. SwapaLease buyers pay either $34.95 for a 45-day membership or $49.95 for a lifetime membership. (Remember, these are short-term leases, so you may be back in a couple of years.)
At LeaseTrader, the seller pays $59 to list the car. Buyers can get started for a 60-day membership fee of $29.95. The price includes a credit verification, which lets sellers know you're a serious candidate to take over their lease. If you become a "premium" buyer for $79, you get one free vehicle-inspection report.
Pricing a Lease
As the seller, you want the buyer to pick up your monthly payment for the remainder of the lease term. The buyer is looking for a good deal. So what's involved in pricing the transfer of a lease?
The number of months remaining on the lease and the monthly payment amount are key factors. But the value of the lease also depends on the number of miles remaining on your lease. The more allowed miles you've used, the less value to a buyer. You may have to offer an incentive to the buyer, such as giving him an upfront check that effectively lowers the monthly lease cost. If a lot of money is being transferred as an incentive, an escrow service is available at each site.
What's Left to Do?
There are a few things to keep in mind after you've agreed on a deal:
At SwapaLease, you must handle the paperwork. LeaseTrader charges the buyer and seller a $149 fee, which pays for a representative to handle all aspects of the transaction.
Confirm that the car is in the advertised condition by a personal visit, digital photos or an independent inspection service offered by both sites.
Check on leasing-company transfer fees, which range from $35 for
Toyota (TM Quote) to $595 to transfer a lease handled by
General Motors(GM Quote).
Register the car and pay appropriate taxes in the buyer's location, or the leasing company will add the tax amount for his state to each monthly payment.
Agree on how the car will be transported to its new location and who will pay the cost. LeaseTrader works with
FedEx (FDX Quote) to arrange delivery to distant locations.
If you're thinking that it would be easier to ride out your current lease than to get rid of it, you might be right. But if you absolutely must get out of your lease, it's nice to know that LeaseTrader and SwapaLease are right at your fingertips. That's the Savage Truth.
