Swap A Lease Review: The Pros and Cons

When you signed your original automobile lease, you might have thought it was perfect, but life is full of changes. Circumstances may have lead to a job loss or relationship change that requires you to get rid of your former car lease.

But now you have the option of “swapping your lease.” This matches a buyer and seller of a vehicle lease. Here is a review of the pros and cons of “swap-a-lease” programs such as SwapALease and LeaseTrader.

Why can a car lease become unmanageable?

When you “signed on the dotted line,” your car lease was based on your future projections for social and financial continuity. As we all know, plans change. Now you can change your automobile lease to better fit your new reality.

Or things may have changed in another way: You may not need your present car due to public transport. Your family may be growing and you want a minivan. Your company may have offered you a company car.

Whatever your reason for wanting out of your lease or wanting to lease a different car, here is how “swap-a-lease” programs work.

What can I do with SwapALease?

The SwapALease option matches two parties — the seller (holder of the car lease) and the buyer (wants to assume car lease). The seller will place pictures of his vehicle along with conditions of the contract on a website. The buyer will look for a vehicle matching his needs. Many buyers want a short term lease of 6 to 18 months according to Cars Direct.

The seller controls the automobile or truck, owns the lease and has built up equity. Most sellers hope to avoid high early termination fees; the buyer wants to avoid a high upfront down payment. It is important to consider mileage caps and usage limits.

Carefully inspect the vehicle

When the buyer is ready, he should conduct his own inspection of the vehicle looking for signs of accident damage. A submerged vehicle could lead to mold or electrical system problems. Painted over, soldered or uneven areas might hide accident damage. Also, check the air bags; air bags deploy during crashes.

Write down the 17-character vehicle identification number (VIN), usually found on the front dash or back taillight. Check the mileage — does it match a vehicle of this age? When you negotiate the “transferred lease,” see if you can add extra miles for your own usage. Some sellers offer a cash incentive to sweeten the deal.

Be very careful and review the entire transferred lease, it might be wise to have an attorney read the terms and conditions. While most leases can be swapped easily, some organizations do not allow the practice. When all is said-and-done, the original leaseholder may still hold some post-lease liability because he is officially a co-signer to the new leaseholder’s agreement.

Pros of SwapALease

• Avoid large down payment and early termination penalties.
• If you inherit someone else’s lease, you don’t need to find your own financing.
• It might be easier to swap-a-lease for a short time frame as a sort of bridge during an uncertain time.
• It is a nice option if you want to change vehicles every couple of years.
• Swapping-a-lease may be preferable for someone with bad or no credit.
• You can ride off with the car you want faster when you swap-a-lease.
• This is a smoother process for all parties.

Cons of SwapALease

• There is a reason why someone else found the car lease arrangements unsatisfactory; do you want to inherit someone else’s problems?
• Car values deteriorate rapidly, nearly 15 to 20% each year. The original financing was done on a more valuable automobile.
• Interest rates might be lower today under the Federal Reserve’s Zero Interest Rate Policy (ZIRP). A new lease financing deal may be cheaper in the long run.
• Older cars require more maintenance.
• There are many steps to swapping a lease.
• Additional fees may be added.

In general, you should be careful about leasing a vehicle and make sure it’s the right choice for you — both now and in the foreseeable future. But if your needs change and you need to get out of your lease quickly, SwapALease might be a good solution.