Get Out Early, Get In Late: What to Know About Auto Lease Transfers ""

By | March 16, 2018

$199 Lease Deals For August 2017

$199 Lease Deals For August 2017

There are usually three reasons people want to get out of a car lease early. A financial situation could have changed, making payments difficult. Or maybe there was a move to a city, and a car is no longer needed. Most people just want a new vehicle. “There’s a honeymoon period with a new car,” said Sergio Stiberman, founder and CEO of LeaseTrader. The bliss typically ends after about a year and a half, he added, and after that, minor defects become more noticeable, the new-car scent may have worn off, and little quirks that were once endearing are now seen as daily nuisances. Trouble is, most new-car leases typically span 24 to 36 months, and many run longer than that.

Luckily, some people may want to get into a lease late to benefit from a shorter term and avoid some upfront costs, and, if the stars align, a lease transfer can happen. But, as Stiberman noted, “The taking-over process is a little more intricate than walking into a dealership and walking out with a car.” Here’s what to know about getting out of a lease early or dropping into one late.

Getting Out Early

Generally, it’s far easier to buy a vehicle than it is to sell one. The same is true with getting out of a lease. If you’re getting very close to the end of your lease, say with three months left, you may be able to work with the dealership in trading the car early for a new one. However, if there’s no pull-ahead promotion at the time you need one, whatever negative equity you still had could be rolled into the next lease. Or you could choose to buy the vehicle off the lease. If neither of those options work for you, the alternative is turning over your lease not to the dealer but to another person, which is known as lease assumption.

Before you advertise your lease as available to assume, you need to make sure it can be transferred in the first place. Scot Hall, executive vice president of the website Swapalease, said that for automaker finance companies and banks that handle vehicle leasing, there are three types of lease transfers or assumptions:

  1. The leasing company permits a full transfer, and the original lessee walks away free and clear;
  2. There’s a transfer of equity, but the original lessee remains on the lease as liable and is essentially a cosigner;
  3. The leasing company doesn’t permit transfers or only will do so under very specific circumstances, such as military deployment.

Hall estimates a little over half of leasing companies are in the desirable first category, followed by 25 to 30 percent in the second, with the remainder in the third. For companies that do allow transfers, many will have a point of no return. Several do not allow transfers in the final 12 months of the lease, and some will have a minimum number of payments remaining. Nissan Motors Acceptance Corporation, for example, requires no fewer than seven payments to be left for the lease to be transferred. Some companies have restrictions on transfers in certain states.

Listings seen on Swapalease.com

Listings seen on Swapalease.com

Listings seen on Swapalease.com.

And there are fees associated with trading leases, including credit-check and transfer fees that can range anywhere from $75 to upwards of $500. If you want to use an online platform such as Swapalease and LeaseTrader, they too have costs. To list on Swapalease, it’s $59.95 for a one-photo ad, plus a $150 “success fee” if the lease is sold—which is charged whether or not a potential sale actually goes through. A Swapper’s Club rate of $99.95 adds that success fee and allows up to 12 photos, and a $199.95 Swapper’s Club Gold package includes the photos—and the success fee—plus it features the ad for two weeks.

LeaseTrader starts at $99.95 for a 15-photo listing. All listings add a transfer commission fee of $149.95 upon sale. You can get into a $199.95 package for “seven days of high exposure” or a $249.95 package for 30 such days, which the company says will include social-media marketing, listing your ad under suggested results, and placing it in prominent galleries on the website.

A perusal of consumer complaints online turns up a common refrain from people who disliked these services: They paid money to use them but did not succeed in selling their lease. For people who wish to list a lease exit for free, there are Craigslist and Facebook Marketplace, though there will likely be far fewer shoppers.

So, if you want out of your lease early, and the lessor allows you to transfer, you do have some options. But you’ll probably need patience.

Lease takeovers seen on LeaseTrader.com.

Lease takeovers seen on LeaseTrader.com.

Lease takeovers seen on LeaseTrader.com.

Getting In Late

On the other side of the coin is getting into a lease late. Taking on a lease midway through its life involves communicating with the seller and making sure the car is in good condition—just as you would when buying a used car. But with a lease, if there’s any damage, you could be hit with charges when you turn in the car.

Speaking of, some leasing companies charge you turn-in fees. Sellers should show you their lease contracts so you know what you’re facing. Either way, you’ll be dealing with the leasing company once you agree to take over as lessee, and the transfer process could take anywhere from three days to three weeks, said Swapalease’s Hall.

You’ll also want to pay close attention to mileage limits, which vary from lease to lease. Check the number of allotted miles per month or per year against your driving habits and commutes—and the miles already on the odometer.

Your vehicle options won’t be nearly as robust they would be if you were a typical car buyer. There are simply fewer people ridding themselves of their leases than there are new and used cars for sale. And if you live outside an urban area, trading or swapping a lease becomes even harder. “You don’t see a lot of leasing in the middle of Iowa, for instance,” Hall said.

Lease takeovers seen on Craigslist.

Still, lease offers can be found on Craigslist and Facebook or, obviously, on the aforementioned specialty sites. On Craigslist, a search of “lease takeover” turned up about a dozen results in well-populated places like the metropolitan Detroit area but yielded nothing in southeastern Iowa. On Facebook Marketplace, we found a handful of lease takeovers being advertised within a 40-mile radius of Detroit.

On the Swapalease and LeaseTrader websites, it costs money to sign on as a potential buyer and contact sellers. Swapalease charges $59.95 to register as a buyer, and LeaseTrader charges subscription rates of $9.99 per month for a six-month minimum, $14.99 per month for three months, $19.99 per month for two months, or a flat fee of $34.99 for one month. While these sites cost money, they’ll also perform one free credit check with your subscription to save you some time in wondering if you’d qualify for a lease takeover. You’ll need good credit to pass.

Aside from the benefit of a shorter term, an advantage that makes it worthwhile to capitalize on going into a lease late is that you can avoid the thousands of dollars often required as a down payment at the start of a lease. In fact, some people are so desperate to get out of their leases that they may be willing to add cash incentives to the offer. But it’s up to you to shop around and make sure the monthly payment being offered is reasonable.

Lease takeovers seen on Facebook Marketplace.

In the comings and goings, Hall and Siberman said, most of their transactions occur in the 12-to-20-month range of time left on leases. Many of their customers only want to be in a car or truck for little more than a year. For some people, two-plus years is just too long. But given the right circumstances, leases can be burned at both ends.

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