If you recently lost your job, are going through a lifestyle change or just like to have a new car often, a lease transfer may be a good idea for you. Leases are contracts which can be very expensive to get out of. Scot Hall, executive vice president of operations at Swapalease.com, says that a lease transfer can help consumers get out of their lease without the expensive consequences.
“Most leasing companies and banks permit leases to be transferred,” Hall says. “There’s no potential financial liability moving forward for the current lessee. The first person walks away from the lease and the second person gets a great deal.”
So what’s the first step consumers should take if they’ve decided they need to get out of their lease? Hall says that you can contact your leasing company to tell them you are attempting to transfer the lease to someone, but it’s not necessary because eventually, they’ll find out once they’re contacted by a lease transfer company.
Consumers can then find someone to take the lease over themselves, or list their lease on a lease transfer Web site. They’ll list the monthly payment information, the number of months remaining on the lease, the number of miles left to use and any financial incentives they may want to offer.
Hall says that Swapalease.com offers different programs, but it costs about $100 on average to list your lease on the site. The leasing company may charge a fee, which is about $300 on average, to process the transfer, Hall explains. This is usually paid by the person taking the lease over, but is negotiable. It’s usually paid directly to the leasing company.
Another thing to keep in mind is that once you or the lease transfer company finds someone who is interested in your offer, you have to pay a fee, usually $25 to $35, to the leasing company to process that person’s credit application. So every time you have a consumer interested in your lease, remember that you have to pay to have their application run.
Some people use incentives to entice shoppers to take their lease over rather than someone else’s.
“Someone may offer a $1,000 incentive because they used up a lot of mileage or the car needs some body work,” Hall says. “This effectively reduces your monthly lease payment.”
Hall explains that even if you’ve found someone, like a friend or family member, to take over your lease, that person still has to be approved by the leasing company. They still need to go through the credit check and it still all needs to be done the proper way.
“If the person you’ve found to take over the lease doesn’t get approved by the leasing company, you need to move on and find a new person,” Hall says. “We do the hard part for you, which is matching you up with someone to take over the lease.”
After a lease transfer has been completed, it will be a positive mark on your credit, in most cases.
“Once you transfer the lease, it will show as a pay as agreed account on your credit report,” Hall says. “It’s important to keep making your monthly lease payments until it has been transferred though, or you’ll damage your credit.”
3 QUESTIONS TO ASK WHEN CONSIDERING A LEASE TRANSFER:
1. If you are trying to transfer the lease to someone else, once it’s completed, are you completely absolved of all financial responsibility? (Some lease transfers let someone take over the lease, but if that person doesn’t pay, it’s your credit on the line.)
2. Is the person who wants to take over your lease credit worthy? (You pay to have the lease company check his or her credit application.)
3. What is the minimum remaining term of the lease the lease company will allow before a transfer? (Some lease companies will let you transfer with six months left, but some won’t let you transfer if there’s 12 months left.)