Auto Leasing: Sweet Car Deals on Lease Takeovers
Let's say you are itching for a new and different car, maybe one with much better gas mileage. But a visit to the dealership turned up a limited selection and a high selling price. Why not stall? By taking over a lease with a year or two until expiration, you can delay your next purchase until the new-car inventory situation improves.
"Production issues in Japan have triggered price increases across the board for all makes, foreign and domestic," says CEO Jeremy Anwyl of auto information site Edmunds.com. "The average price of a new Honda Civic, for example, has gone up more than $1,600 since March." Looking at a lease-swapping deal is one of several ways Edmunds suggests shoppers avoid buying an overpriced new car now.
Lease holders frequently need to get out of their current leases, and for a variety of reasons -- from financial setbacks to a growing family that won't fit in that sporty convertible. The web site LeaseTrader.com handled 75,000 of these swaps last year. Traditionally, the leases being offered have been for BMW, Mercedes-Benz or other luxury brands, because leasing is more prevalent among luxury cars. "But now we are seeing more leases [offered] for small, high-gas-mileage cars," says John Sternal, a vice president of LeaseTrader.com.
For instance, among current offerings are several for the Toyota Prius, one of the cars hardest hit by Japanese supply disruptions. One especially low-payment deal is for a silver 2010 Prius in Miami; the lease is $210 a month, with 22 months left to run. If you needed a shorter lease, a blue 2008 model in the New York City suburbs has payments of $355 a month but just nine months to go.
Beyond the possibility of getting a higher-MPG car now, picking up a lease can be a chance to try out a luxury model you are considering but not yet ready to commit to. There's a 2009 BMW 535 iXdrive sedan in San Ramon, Calif., for instance, with monthly payments of $699 and 13 months to run.
So how does the transfer process work?
- LeaseTrader charges moderate fees. Shoppers pay $39 initially; if they complete a deal, there's a $149 fee for the paperwork involved in the transfer. Before doing any deal, however, inquire about transfer fees from the bank or leasing company that holds the lease: That transfer fee can be as little as $50 or as much as $600.
- Transfers work best in the same geographic region. If you can drive with a friend or fly one-way inexpensively and then pick up the car, it minimizes costs. LeaseTrader can set up cross-country transfers for you, but the price runs about $1,000.
- Get an inspection if you can't see the car. If you are considering a lease swap from far away, make sure the car is in good shape by hiring a professional inspector. (See Should You Buy a Car You Haven't Seen?)
Just Be Patient. If the car you are driving is still serviceable, patience is a virtue. Most analysts believe that by early or mid-2012, automakers will have solved the supply problems for new cars and the parts that go into them. That should mean better selection and much better prices at the dealership.
Extend Your Own Lease. If you are leasing now and that lease is near expiration, see if the leasing company will consider extending your lease by six months or so. That should put you in a better situation for a new lease or purchase.
Don't Jump for a Used Car. When new car prices are high, buyers traditionally have switched to less-expensive used cars. But this year, limited supply has caused used car prices to shoot up. (See Used Car Prices Surging.)
Whatever your situation, analyze your costs carefully before making any commitment. For instance, calculate the likely gas savings from getting a higher-MPG car. Gas will remain expensive. But it already has dropped from its peak near $4 national average for regular to below $3.80. Don't let your annoyance at high pump prices push you into an ill-advised move.
Photos courtesy of the manufacturers
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