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Car leases average less than 16 months now

Mon, 12 Dec 2011 22:37:19 GMT

Car leases average less than 16 months now

LeaseTrader’s total inventory is 15.3% of 2011 model leases. The previous record was 2005, when 13.5% of leases were listed by the end of the same model year. The 2010 lease year represented 10.6% of total inventory.

“The fact that so many 2011s have already come into the LeaseTrader marketplace shows that lease deals continue to get better and more people want to exercise their option to transfer earlier,” said Sergio Stiberman, CEO and founder of LeaseTrader.com.

“People should not have to wait three or four years if they see a car they’d rather have at any point during their lease contract.”

Many of the drivers looking to escape their 2011 leases are doing so to take advantage of an even better lease deal on a 2012 model, Stiberman said.

This, he says, expedites the auto sales cycle and creates more inventory turnover at the dealership level in addition to secondary channels. BMW, Mercedes, Toyota and Cadillac are the top four brands with 2011 models listed in the marketplace.

That a significant population of drivers would escape their leased vehicle after just 12 months is no surprise, LeaseTrader officials say. This is because demand for one-year lease activity has gone way up since January with takeover demand up 14.2% during that period.

The appetite for extreme short terms in leasing is becoming more prominent, and today the typical lease customer looks to escape a lease after about 16 months into the contract. More dealers are offering 24-month leases and some manufacturers are allowing car buyers to treat their financed vehicle like a lease through a four-year buy-back program.

This Christmas, give the gift of debt relief

Mon, 12 Dec 2011 15:19:05 GMT

This Christmas, give the gift of debt relief

Are you looking to give something to the person who has lost everything? How about taking on some of their debt obligations this holiday season?

Leasetrader.com calls it giving the gift of debt this year, and the car leasing site says it's on the increase.

"Last year was the first holiday season where we saw the inkling of a trend," says John Sternal, vicepresident of leasetrader.com.

Consumers in economic distress but still with car payments started "gifting" their cars to friends who would take over the lease payments as part of the deal.

In 2010, leasetrader said only about 1% of its activity in December fit this scenario but in 2011 the trend has picked up steam. Leasetrader said 4.5% of activity in November fell into the gift category and this month the trend is expected to be 6% of activity.

"People would come to us and say they want to transfer their Car Lease over to this other person. They'd say, 'I know the other person and we kind of agree I'll do it as a way of giving them a gift but obviously they are helping me out,' " Mr. Sternal says.

But who is really giving the gift here? If I have a three-year cellphone contract and a year-old cellphone that I hand over, what type of deal is that? If you take over the gym-membership commitment your buddy can't afford, who is getting the short end of the stick?

"We are talking about people in dire situations who cannot buy gifts for people," says Mr. Sternal, adding maybe this a way for some people in financial stress to save a little face.

Count Scott Hannah, executive director of the Vancouver-based Credit Counselling Society, as someone who is a bit skeptical.

"Whenever we've seen a client with a lease and they are looking for someone to take [a lease] over, it's not a gift, it's never a gift," he says. "There could have been some upfront payment but debt is not usually a gift."

Not that's he's against such generosity during the holiday season. He has seen a parent step in and help their children out with a lease sometimes. It's just so tough for people in financial difficulties to admit their situation. "We can see it with families where there is a sense of obligation," Mr. Hannah says.

The holiday season is traditionally a time when people take on even more debt, so any dent in spending or a gift that reduces your debt would probably be welcomed by most Canadians.

Holiday spending will drop from $613.50 per person last year, according to a Bank of Montreal recent survey. However, the average respondent said they will still spend $582.70 in 2011.

Business-services firm Deloitte said the median spending point even for households with income of less than $30,000 will be $264. For household with income above $150,000, it rises to $816.

"If a person knows you are in debt for Christmas this year, they can give a financial gift and we see that with cash," says Mr. Hannah, adding you just can't agree to pay people's credit cards off as a gift. "It's not the same as saying here is a $1,000 so you can pay off your debt."

But what are the odds that cash gift ends up paying off debt? Mr. Hannah says 50/50, because most people in debt are in so much trouble they just don't think they'll get out from under, so why bother?

"It could help you in the short term but if you've got money management issues [helping with debt] could perpetuate the problem," says Jeffrey Schwartz, executive director of Consolidated Credit Counselling Services of Canada Inc. "Maybe it could be a gift, not a loan. You could say I'll throw $500 towards your Visa bill."

I like the idea of taking on people's debt. Paying down someone's debt is even better, if you have a close enough relationship to broach the subject. Less debt means less interest. Talk about a gift that keeps on giving.

Beware holiday gifts with strings attached

Fri, 09 Dec 2011 17:24:20 GMT

Beware holiday gifts with strings attached

'Tis the season of gift-giving, but instead of the usual cable-knit sweater or tube of socks, some people are giving something else: their debt.

Since the financial crisis began in 2008, households have been paying down debt. According to the Federal Reserve, the ratio of debt payments to disposable income each month has fallen to around 11 percent, the lowest level since 1994. An analysis by American Century Investments has found that overall consumer indebtedness in the U.S. has fallen by about $1 trillion since 2008.

But loan balances remain, and some consumers are looking for ways to offload the debt on to someone else or to get help from others in paying the balance down.

"You're seeing people give the gift of debt," said Daniel Gershburg, a consumer bankruptcy attorney in New York. What do you do if you unwrap such a gift this holiday?

Co-signing caution

In some cases, you may be asked to become a co-signer on a debt. But agreeing to be a co-signer should be done only in "extreme situations," said Jack Gillis, director of public affairs at the Consumer Federation of America.

Here's why: As a co-signer, you can be held liable for the entire amount of the debt, not just your half of the monthly payment.

"A lot of times people think because you're sharing the responsibility with someone else, you're not liable for the full amount. But both parties are," he said.

Also, the debt will have the same effect on your credit score as any other loan that you borrow on your own.

"You need to go into this with eyes wide open and with extreme caution," Gillis said.

Gershburg said another common scenario he sees is a boyfriend or girlfriend putting the name of his or her partner on the deed of a house. In that case, the partner is not responsible for the mortgage but is on the hook for liabilities associated with the property, such as taxes.

"People run into trouble with this all the time," he said. "The person giving you this doesn't want to get married because that's too serious. But he does want you to make a big financial commitment."

Careful with lease transfers

To get out of a Car Lease, the driver either has to break the contract and make the remaining car payments all at once, or he can transfer the lease to someone else.

Not surprisingly, the second option is more appealing. And today, several websites, such as swapalease.com and leasetrader.com, help facilitate lease transfers, which include fees.

The "buyer" of a lease has a few advantages, the chief one that you don't have to come up with a down payment, said John Sternal, vice president at LeaseTrader.com. Also, you can get a lease for a shorter term, say, 12 months, than you'd probably find at a dealership.

"At a dealership, you most likely have to commit to 36 or 48 months," Sternal said.

But again, you have to be cautious. You want to check that the mileage is well below the limit on the lease and that the car is in good shape. Otherwise, you, as the new lessee, will be responsible for the additional fees.

"We encourage buyers to find car in their own backyard so you know exactly what you're getting," Sternal said. Additionally, at LeaseTrader.com you can request a third-party vehicle inspection for a $99 fee.

And if you use a website to transfer a lease, you'll have to pay other fees. At LeaseTrader.com, for example, you pay a membership fee (60-day memberships start at $39.95) and a $149.95 (after $100 rebate) transfer-initiation fee. Additional fees could include a bank transfer fee (between $0 and $600).

The company says any costs can be negotiated between buyer and seller.

5 Gift Ideas You Should NOT Give This Holiday Season

Fri, 09 Dec 2011 17:20:23 GMT

5 Gift Ideas You Should NOT Give This Holiday Season

Would you like it if somebody gave you a “gift” this holiday season that wound up costing you more than $30,000?
I don’t know about you, but I’d consider that one very expensive “gift” that I’d certainly want to return.
Yet, every year people give their loved ones financed or leased cars as “gifts.”
“I see this all the time,” says Daniel Gershburg, a consumer bankruptcy attorney in New York City. “The gift recipient is amazed and thinks that they got a steal, because they didn’t have to put down money to get the car. But really what someone has given you is 36 to 48 months worth of car payments.”
Often times, particularly when the gift-giving occurs between boyfriends and girlfriends, “one or both of them later wind up in my office filing bankruptcy,” Gershburg adds.

Don’t Gift The Gift of Debt
So if you’re thinking about playing Santa in a very big and impressive way this year, you might want to re-consider certain gifts that may leave the gift recipient with debt. In some cases, over-giving can lead to a loss of relationships, as Elizabeth Gilbert, the author of Eat, Pray, Love has found out.
Even if you don’t plan on going all out, and giving someone something as splashy as a new car, there are other gifts that might wind up costing the recipient lots of money. Here are a few of them:
Gym Memberships (Or Any Memberships/Contracts)
That lifetime gym membership may initially seem like a good idea, but who really wants to be tied into an annual contract for life? And are you certain that the person you’re presenting with the membership (or contract) can maintain those payments?

Magazine Subscriptions
Sure, your Aunt Helen enjoys reading People magazine or the latest issue of Better Homes and Garden whenever she can. But that’s usually when she’s in an airport or the doctor’s office and simply trying to pass the time. If you sign her up for a monthly magazine subscription, and make her financially obligated for a new bill she didn’t expect, she might not think you as her favorite niece (or nephew) anymore.

Video Gaming Units, Such as Nintendo, Wii or X-Box
I don’t mean to sound like a holiday Scrooge, but one of the reasons I haven’t bought any of these popular video game consoles for my kids (and yes, they’ve asked!) is because I know that these systems will require my husband and I to also purchase accessories, and to keep buying games – over and over – that cost $25 to $50 each. A word to the wise: think twice before “gifting” such items.

Bare-Bones Computers
Buying grandma a basic computer, or even a sophisticated one, to get her connected and into the 21st century is a nice thought. But have you also thought about certain extra costs that go along with this nice “gift”? The cost of monthly Internet access, software, printers, and other hardware can easily set you (or grandma) back many hundreds of dollars.

Sports Lessons
If you find a great deal on sports lesson for a relative or friend, it’s likely to be a one-time thing or a one-year bargain. But what about the ongoing costs – especially the gift recipient gets hooked on that sport? Also, there’s the financial expense of sporting equipment, athletic gear or any athletic clothing that may be required.
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Fortunately, if you’ve been the “lucky” recipient of a “gift” you truly can’t afford, there are some ways to offload those presents.
If you got a leased vehicle, for instance, you can use a service like LeaseTrader.com to find someone else to take over the lease car payments and get yourself removed from the contract. There are even online sites, including Gazelle.com, that let you sell or recycle your electronics. Video gaming consoles or other high-tech toys can also be re-gifted to others who can actually afford to enjoy them on a continuing basis.

A Financially Savvy Alternative Gift
As for all of you generous gift givers, if you’re at a loss for what to buy someone and you’d like to get a gift that could go up in value as opposed to making someone’s bank account go down in value, here’s an idea.
Instead of gifting loved ones with things like electronics, clothing or jewelry, “gift them with the actual company’s stock and give them something they will thank you for years from now too,” says Zaim Hajdari, president of financial management firm, The Hajdari Group, which manages more than $300 million in assets.
Hajdari’s stock picks include Starbucks, Home Depot, Tiffany, and McDonald’s. He notes they would all make good holiday gifts, as opposed to the items that these companies sell.
Now that’s smart gift-giving – without giving the gift of debt this holiday season.

LeaseTrader.com Sees 2011 Model-Year Listings Hit Record

Wed, 07 Dec 2011 17:11:09 GMT

LeaseTrader.com Sees 2011 Model-Year Listings Hit Record

LeaseTrader.com revealed Tuesday that 2011 model year leases have broken its record for largest amount of same-year leases to hit the site.

This high lease turnover rate can help speed up the automotive sales cycle, also potentially creating more inventory turnover at the dealership level. BMW, Mercedes, Toyota and Cadillac are the top four brands with the most 2011 models listed in the marketplace, the company noted.

Interestingly, LeaseTrader’s total inventory is made up of approximately 15.3 percent of 2011 model leases.

This number broke the company's previous record set in 2005, when 13.5 percent of leases were listed of the same model year.

Just last year, the 2010 lease year only represented 10.6 percent of units listed on the site.

But the fact that many drivers want to switch out their leased vehicle after just one year doesn’t surprise LeaseTrade officials, the compay noted.

In fact, demand for one-year lease activity has apparently shot up since last January, with takeover demand up 14.2 percent during that period, the company shared.

“The typical lease customer looks to escape their lease after an average of just 15.7 months into the contract,” officials continued.

As a result, more dealers are beginning to offer 24-month leases, and some manufacturers are allowing car buyers to treat their financed vehicle like a lease through a buy-back program, as well as launching healthy incentives.

Also, the rise in consumers looking to get out of lease contracts early may be in part due to OEM's increasingly attractive lease deals, company officials stressed.

And many of the drivers looking to escape this year’s leases might even be trying to take advantage of an even better lease deal on a 2012 model.

Commenting on the news, Sergio Stiberman, chief executive officer and founder of LeaseTrader.com, said, “The fact that so many 2011s have already come into the LeaseTrader marketplace shows that lease deals continue to get better and more people want to exercise their option to transfer earlier.

“People should not have to wait three or four years if they see a car they’d rather have at any point during their lease contract,” he added.

This Christmas, give the gift of debt relief

Wed, 07 Dec 2011 15:40:22 GMT