Swap a Car Lease

If you're interested in leasing a car, and you are looking for a no-money-down arrangement, then you might want to swap a car lease.  If you're not familiar with the concept, you really don't need to "swap" a car lease with someone else; you can either be the buyer or the 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 car leases with "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 is looking to assume the remaining car lease payments from the seller.

Sellers are typically individuals that are looking to upgrade their lease, or have run into financial difficulties.  Buyers are usually individuals looking for a good deal on a short-term car lease.  This is an important point.

In general, a lease term on a car is of relatively short duration.  Lease timelines will usually span 2 to 4 years.  If the buyer is looking to assume a lease from another party, then the duration of the swap lease will usually be less than two years.

A seller needs to determine whether or not they can actually sell their car lease to another party.  This type of arrangement is typically referred to as a lease transfer.  Not all leases allow for lease transfers.  Potential sellers need 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 fairly obvious.  They allow the owner of a car lease to exit the arrangement without the worry of buying out the lease, which can be an expensive undertaking.  When a lease swapping marketplace is active, sellers are matched to buyers in a way that guarantees sellers will get the true market value for their lease.

The buyer of a lease also has some big advantages with this kind of arrangement.  The swapped lease allows buyers to avoid putting a large amount of money down on a lease.  This is usually in the form of an upfront capital cost reduction payment, which is often used by dealerships to lower monthly lease payments.  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, then make sure the car is in good running condition and the car's out of 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 company creating the robust marketplace or website.  This 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

Potential buyers and sellers of car leases need to be aware that 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 the vehicle 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 often referred to as a mileage cap.  Before entering into a lease swap, buyers need to make sure they 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 an unacceptable arrangement for a buyer.  We're going to close out this article with a real life example:

Swap-a-Lease Example

We found a website where you can get a late model BMW 5 series sedan for only $220 per month.  This car had 15 months remaining on a 24 month lease.  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.  After only eight months, the car already had 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 was $0.25 per mile, and that charge will quickly bring up the effective monthly payment on this vehicle.

If the buyer drove the car the original lease allowance of 1,000 miles each month, the excess mileage charge would be an additional $40 per month.  This brings the true cost of the lease back up to $260 per month.  Buyers need to do their homework, or they could wind up leasing a car that's too costly to drive.

Online Car Lease Help

If you're still interested in swapping a car lease, and you're in agreement that doing your research is important, then we can help with our online auto calculators.  In particular, you should take a close look at our car lease calculator, which can help you figure out if you're getting a good deal on the car.  If you're not familiar with car lease terms, we also have a car lease glossary that you can use for reference too.

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