LeaseTrader.com Helps Drivers Get Out of Long-Term Car Leases
By LIZ WIEDEMANN - 10/1/2007
San Diego Business Journal Staff
Automobile leases still may be ironclad, but drivers can now benefit from flexibility when it comes to getting out of contracts early.
According to Miami-based LeaseTrader, escalating gas prices are putting a dent in the wallets of sport utility vehicle drivers, and a company report shows that 15 percent of LeaseTrader’s Web site users are transferring out of leases with the intention of getting into a smaller car.
The nine-year-old LeaseTrader.com helps consumers terminate lease contracts without penalty by enabling new drivers to pick up existing leases.
Life changes such as marriage, loss of job, or a newborn child can make long-term leases a financial liability for many lessees.
According to LeaseTrader Vice President of Marketing Communications John Sternal, a lot of those drivers do not want to be bound to cars that use an excessive amount of fuel.
“We have two types of customers — those who live according to their needs, and those who live according to their wants. The first group is looking to get into a more affordable car based on some event or change, whereas the second group is seeking an upgrade to the hottest new vehicle out there,” Sternal said.
California, specifically Southern California, is by far the best-selling market for the company’s services, Sternal says.
Huge Market
“I think there are two reasons for Southern California’s huge leasing market. It’s a huge commuter region, and as more fuel efficient cars hit the market, people want them. Also, the area is known for being trendy and trendsetting,” he said.
In 2006, LeaseTrader handled 20,000 transactions, and the company projects 35,000 transactions for 2007.
“For the first several years we were mainly focused on the infrastructure — talking to car leasing companies to get them on board. Now we’re starting to see the awareness snowball,” said Sternal.
LeaseTrader’s revenues are up 100 percent a year since about 2003, Sternal says.
So what’s the catch?
Because LeaseTrader, which has 25,000 vehicles listed in an online database, does not terminate existing leases, but rather finds another customer to take it off the company’s hands, there is no catch.
Interested traders can browse inventory on LeaseTrader’s Web site for free, and if they want to contact a “seller,” they pay a fee of $39, good for a 60-day membership with required credit verification.
“Before you can begin any sort of negotiation, you’ve already had the credit verified from both parties, and then you begin the transfer process. The transfer fee is $149 for both parties, and then the transaction is complete,” said Sternal.
Shipping varies, though cross-country transportation ranges from $600 to $900 per car.
Some leasing companies have restrictions on transfers of leases, such as Honda, Nissan and Infiniti, which do not perform full transfers. Instead, they hold the original lessee liable for the costs, which Sternal calls a “customer-unfriendly policy.”
“The leasing companies aren’t in the business of finding credit-qualified people to take over a leased vehicle contract. That’s where we come in. The Car Lease companies have to give final approval, but as long as the buyer is qualified, there typically is no problem and people are free to transfer,” Sternal said.
Full Transfers
Ford, Jaguar, Land Rover, Mercedes-Benz, BMW, GMAC and Toyota can allow full transfers with the help of LeaseTrader.com.
Gina Cunningham, owner of Cunningham BMW in El Cajon, says she is unfamiliar with LeaseTrader, but adds that the lease transfer process sounds useful.
Cunningham said from a customer or dealer standpoint, she prefers the personal relationships that come from working directly with dealerships rather than a third party.
“Dealerships want to work with customers and put them in the vehicle that makes them happy. If there’s a way to work one-on-one with lessees and solve any issue, we try to do that first,” she said.
Leasing is more popular than ever for its flexibility and shorter term commitment with a lower cost payment, says Lance Roberts, director of public and regulatory affairs for the New Car Dealers Association San Diego County. Though, more people are still buying rather than leasing, by far, he said.
San Diego car sales are on par with the national average. For the first six months of 2007, national car sales were down 3.2 percent from the same period last year, while sales for San Diego were down 3.5 percent.
Roberts said that last year, San Diego’s sales were lower than the national average by more than 3 percent.
“Manufacturers offered amazing incentives after Sept. 11, 2001. They sacrificed profit just to move vehicles off lots through 2003 or so. As people pay off those cars, they’ll be trading them in. Heavy selling cycles are always followed by a lull, and then a heavy buying cycle,” Roberts said.
Despite rapid increases in the cost of gasoline at the pump and environmental concerns, San Diegans still love their gas guzzlers.
SUV leasing sales are up 30 percent from last year, said Roberts. “Surprisingly, there has not been a dramatic shift out of the light truck section — minivans, crossover vehicles and trucks — into regular cars.
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This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com.
This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com