Save Money by Trading a Car Lease
Lease swaps are win-win deals for car shoppers and leased car drivers!
What happens if you lease a car, but need to end the lease before it expires? John, from Aventura, Florida, wrote in with a helpful resource for this predicament.
Car Lease Advantages
About a third of all consumers choose to lease a car, instead of to buy one. Leasing usually allows you to drive a newer or more high-end vehicle, for a lower monthly payment, when compared to the cost of buying it for the same price and down payment. Even if you purchase a car using a low interest loan, leasing is usually less expensive in the short term.
But the monthly payment is just one factor to consider when evaluating whether to lease a car. I did two shows in the fall of 2008 about leasing versus buying a car. If you missed them, listen to episodes number 89 and 90 for more information. I discuss the fundamental differences between buying and leasing a car, and how to know which option is best for you.
Car Lease Disadvantages
One of the disadvantages of leasing a car is that breaking a lease can be expensive. That could wipe out all the money you hoped to save by choosing a lease in the first place. Once you sign a lease, it’s a binding, legal contract that typically lasts anywhere from three to five years. Early termination requires you to pay off the full balance of the lease, in addition to paying hefty penalties to the car dealer or leasing company. A broken lease can also leave a bruise on your credit report.
Lease Trading for Sellers
However, there’s another way to get out of a car lease that’s affordable and doesn’t affect your credit score. It’s called lease trading. John recommends using leasetrader.com because they match up people who want to get out of their lease with people who want a lease. Another company that provides this service is swapalease.com. They both put car shoppers in touch with drivers of leased cars who’d prefer to transfer their lease, instead of having to fork over big bucks for early termination. You simply register online and post information about your lease and the vehicle. When an eligible buyer wants to take over your lease, you transfer ownership to them. They assume your lease and make all future payments—and you walk away from the contract without any financial penalty!
Lease Trading for Buyers
Another reason to consider lease trading is that buyers get some nice benefits too. For example, you can take over a car lease with no money down, since you don’t go through a dealer. You can also find a shorter-term lease, if you don’t want to commit to a typical three to five year agreement. You browse through the online car listings to find something that interests you. Once the company that holds the lease approves you to assume it, you sign the paperwork, and work with the seller to transfer the vehicle.
Lease Trade Considerations & Costs
You can even trade a car lease with someone who lives in a different state; long-distance transfers are not uncommon. You can arrange to have the vehicle inspected by a dealer or a mechanic close to the seller and have it delivered to you by a shipping service. Most online trading sites offer resources for the different services you might need to get the deal done.
If you want to trade your lease, always do it with the leasing company’s knowledge and approval. It’s best to contact them first to make sure that they allow lease transfers—otherwise you could end up being responsible for the payments anyway. You can find the basic transfer policies, restrictions, and fees, for many leasing companies at leasetrader.com.
Listing a leased vehicle online offers no guarantee that you’ll find someone to take it. But there usually are many people in the market for short-term, affordable car leases. Paying for transaction fees and advertising costs associated with doing a transfer will be much less than buying out your lease and paying an early termination penalty.
Be sure to check out my Quick Tip about cutting the cost of your auto insurance for more information.
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About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.
