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 If you're interested in leasing a car and are looking for a no-money-down arrangement, then you might want to consider paying a visit to a relatively new marketplace and swap a car lease. In case you're unfamiliar with the concept, you really don't need to "swap" a car lease with someone else; you can either be the buyer or seller of a lease. Here's how it works.
Swap Lease Arrangements
The basics of swapping a lease work like this. A marketplace is created that matches the "sellers" of a car lease to "buyers." A seller is anyone that currently has a lease on a car that is looking to transfer the lease to someone else. A buyer is someone that looking to assume the remaining car lease payments from the seller.
Typically, sellers are individuals that are looking to upgrade their lease or have run into financial difficulties. Buyers are individuals that are looking for a good deal on a short term car lease. This is an important point. In general, the lease terms on a car are of short duration - 2 to 4 years. If the buyer is looking to assume a lease from another party, then the duration of these leases could very well be less than two years.
Something that a seller needs to consider is whether or not they can actually sell their car lease to someone else. This type of arrangement is usually referred to as a lease transfer. Not all leases allow for lease transfers, so a potential seller needs to do their homework and check with their leasing company before attempting to swap their lease.
Pros and Cons of Lease Swapping
The pros and cons of lease swapping are pretty obvious. They allow the owner of a car lease to exit that arrangement without the worry of buying out of the lease - which can be a very expensive undertaking. When a lease swapping marketplace is active, then sellers are matched to buyers in such a way that the seller gets a truer market value for their lease.
The buyer of a lease also has some big advantages with this kind of lease. First off, they avoid putting a large amount of money down on a lease - usually in the form of an upfront capital cost reduction payment. And since the original lease owner has already made that investment, the buyer gains the advantage of the lower monthly payments.
On the other hand, the buyer is getting only a short term benefit from the lease itself. In just a couple of years, the buyer will have to go through the whole process again. In addition, the original owner of the lease knows how well they've maintained the car. If you're thinking about a lease swap, the make sure the car is in good running condition and that the out of car warranty items are in good condition.
Lease Transfer Fees
The most efficient way for car lease swapping to operate is through a marketplace that matches buyers to sellers. Companies that specialize in offering car lease swaps collect a fee in exchange for creating a robust marketplace.
Buyers can be expected to pay two types of fees. The first fee goes to the website or the company creating the robust marketplace. That is usually in the form of a registration fee. The leasing company itself may also charge the buyer a fee for providing services such as a lease transfer or processing a credit application.
Car lease sellers will often have to pay a listing fee to have their vehicle included in a website's database of available cars. In addition, the seller is usually charged a second fee at the successful completion of a lease swap. This second fee is similar to a sales commission that the swap-a-lease company collects. The total fees paid by a seller are usually around $150.
Swap Lease Warnings
One thing you need to be aware of is that lease swapping does not work for everyone. You need to carefully evaluate the benefit of taking over someone's car lease. Even if the car is clean and mechanically sound, make sure you pay attention to details.
For example, does the car have a manual transmission? Not everyone is comfortable driving a stick shift. Was the car garage kept? Did the prior owner smoke? Even if it passes all of these tests, you still need to be aware of one special situation.
Lease Swaps and Mileage Caps
Most leases restrict the number of miles that can be driven over the term of the lease - this is sometimes referred to as a mileage cap. Make sure you can accommodate the remaining miles left on a lease. What seems on the surface to be a great value in a car lease might be a burden or unacceptable arrangement for a buyer. We'll close out this article with a real life example:
Swap-a-Lease Example
We found a website where you can get a 2004 BMW 525i Sedan for only $220 a month - sounds good so far. This car has 15 months remaining on a 24 month lease - even better; the car is practically brand new. On the surface this seems like a great deal, but there is a hidden cost to this monthly payment.
The original lease arrangement calls for a cap on the mileage at 24,000 miles and the car already has 12,000 miles on it. This leaves the buyer of the lease with only 12,000 miles over the next 15 months. That works out to roughly 800 miles a month. That's not a lot of miles especially if you plan to use the car to commute to work. The excess mileage charge on this car is $0.25 per mile and that can quickly bring up the effective monthly payment on this vehicle.
Even if you only drive the car 1,000 miles a month, you're going to have an excess mileage charge of $40 per month, bringing the true cost of the lease back up to $260 / month. Our point is this, the last thing you want to do is lease a car that's too costly to drive - do your homework.
Online Car Lease Help
If you're still interested in swapping a car lease and you're in agreement that doing your homework is important, then we can help with some of our online auto calculators. In particular, you might want to take a look at our car lease calculator, which can help you figure out if you're getting a good deal on the car. And if you're not familiar with car lease terms, we've also got a car lease glossary that you can use for reference.
About the Author - Swap a Car Lease
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