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Websites help drivers get out of leases on the cheap

For modest fees, services match sellers who are looking to dump their cars with buyers who may not like their dealership's terms.

SELLER: Jason Mehrvarz used LeaseTrader.com after his bank told him it would cost $50,000 to get out of the four-year lease on his wifes car. Within weeks the lease was transferred to a buyer in Sherman Oaks and Mehrvarz paid only $400 in fees. (Genaro Molina / Los Angeles Times / February 8, 2008)

By Martin Zimmerman | Los Angeles Times Staff Writer

February 9, 2008

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Suffering from lessee's remorse?

In the past, making an early exit from a car lease was about as easy as getting out of jail free. Now a handful of websites are offering restless consumers a chance at freedom while also providing an option for those who want to lease but aren't happy with the terms their local dealerships are offering.

Two leading lease transfer sites -- LeaseTrader.com and Swapalease.com -- operate somewhat like the online car-selling services that have become common in recent years.

Sellers (the leaseholders) list their vehicles in a searchable database. Buyers (who assume the lease) contact the sellers directly. Assuming that a deal can be struck, such sites help usher the lease transfer process through the finance company, collecting fees from both parties.

"For the person getting out of the lease, it's the best thing since sliced bread," said Joanne Helperin, who follows the trend for auto website Edmunds.com. "Until now they were just stuck."

LeaseTrader cites a recent study estimating that nearly half of the current 17 million vehicle leaseholders in the U.S. want to get out of their leases early.

Changing circumstances, such as the arrival of a new child or a sudden drop in income, can saddle people with a leased vehicle that is suddenly too small or too expensive. It's no accident that an article about lease transfers appeared recently in Pregnancy magazine. (Out with the Miata -- in with the minivan!)

And lease transfer sites are reporting a rising tide of users who are caught in the housing crisis and can no longer afford their monthly lease payments, or who want to unload vehicles with lousy fuel economy ratings.

"We are hearing from our clients that they're looking to get out of their vehicles because of economy-related issues, such as home foreclosures," said Scot Hall, head of operations at Cincinnati-based Swapalease. The number of gas-guzzling sport utility vehicles listed on their site is also on the rise.

Lease transfers can benefit the person assuming the lease as well, Helperin said. They can save money by leasing a vehicle without making a down payment, or they may be looking to assume a lease with only a year or two remaining -- a much shorter term than dealers typically offer.

"When I get out of my lease later this year I may go shopping for a short-term lease that I want to assume," she said.

Jason Mehrvarz, owner of GDI Computer Consulting in Van Nuys, turned to LeaseTrader after his bank told him it would cost $50,000 to get out of the four-year lease on his wife's 2006 Range Rover SUV.

Within six weeks he transferred the lease to a buyer in Sherman Oaks. He replaced the Land Rover with a leased 2008 Mercedes-Benz ML350 SUV, reducing his monthly lease payment from $970 to $580. The total cost in fees was less than $400.

"It was a very positive experience," Mehrvarz said. "I would absolutely do it again."

He especially liked LeaseTrader's policy of pre-certifying buyers by means of an initial credit check, helping to weed out folks who were just kicking tires.

"That means I'm not getting contacted by the whole world," Mehrvarz said. "I'm getting contacted by someone who has gone through at least one filter."

The lease transfer sites stress that their transactions are not subleases. A transfer must be approved by the bank or auto finance company that handled the original lease, and in most cases the new leaseholder assumes all liabilities associated with the lease.

The costs to users are fairly modest. On LeaseTrader's site, which has 20,000 to 25,000 listings, sellers pay $79 to list their vehicle for an unlimited time. Both parties pay an additional $150 when a transaction is completed.

Swapalease, which lists about 11,600 vehicles, charges about $50 for a basic listing, and an additional $95 (to be paid by the seller) if a transaction is completed.

On both sites, shoppers can browse for free, but must pay a nonrefundable fee to contact sellers. (Swapalease charges around $35 for 45 days; LeaseTrader charges about $40 for 60 days.) There are other costs as well. Assuming the lease of a car located far away means hiring a vehicle inspector (typically $100 to $200) and a transport service (which can cost more than $1,000, depending on the distance.) Both sites will connect buyers with firms that provide those services.