Is lease trading a good idea?

March 24, 2008 8:50 AM

Have you ever taken over someone's car lease? It seems like a great way to save money while leasing (no down payment), but what are the pitfalls?

I know that I want to avoid cars that have low mileage limits or have already used too much of the allotted mileage, and I know that I should have the car inspected to make sure that there's no damage I could be liable for, but are there any other drawbacks? Do you just go to the dealer or the bank with the person who has the lease, sign a few papers, and drive away with your new car?

I do not know the people whose leases I am considering taking over. I've just been searching various lease trading websites.

posted by ducksauce to travel & transportation (6 comments total)

I think you should read about the downsides of leasing before even worrying about whether to take over someone else's lease. Leasing a car is a pretty lousy form of an already bad investment (cars depreciate so quickly). At the end of the lease, you will have paid out an amount of money equal to a car loan payment, yet will have no resaleable asset worth at least $1K in trade, and will likely owe fees.
posted by Miko at 8:55 AM on March 24

Leasetrader.com is cool and I trawl here sometimes, window shopping. Haven't used the site, but it's been around a long time, so if you're interested in doing it, there are lots of cars here.

I think that people who do it are pretty happy. Lease rates are approximately what you'd pay for a car payment, which is you (slowly) buying the car instead of renting it. But if you can find something cheap, I think it's a fine way to be in a late-model car for cheap.
posted by zpousman at 9:08 AM on March 24

Thanks for your reply, Miko, but I have already done the math. Leasing is more expensive than buying, but even when you buy you lose money (due to depreciation and interest on a loan, if you get one). I've just been through a nightmare with an older used car that I bought outright (which seemed like a wise financial decision), but which cost me a lot in mechanics fees and trouble from all the times it broke down. Also, it is sufficiently old and high mileage enough that it is very difficult to sell. I'm looking to get a car that is covered by warranty for the entire time I have it, and to move on to a new vehicle in about two years (so finance is not the only factor). In this situation, leasing makes a lot of sense.

I am mostly wondering about the hidden pitfalls of taking over a lease. I am aware of the well known pitfalls of leasing in general.
posted by ducksauce at 9:12 AM on March 24

I did the "opposite" back in 2001. I had a 99 Land Rover Discovery that I couldn't stand so I put it on swapalease.com I'm in MN and this guy in KY wanted it. He paid the fees and got a credit check with BMW lease at the time, and it was pretty painless for me.

The car was still under warranty and I was at about the right spot for the miles/year. All Land Rover's are in the shop monthly, which is why I wanted to get rid of it. The guy who got it from me paid to have it inspected at my local dealer and paid for transportation.

He later wrote me a letter saying I was a jerk for selling him a maintenance nightmare, but it wasn't me, it was Land Rover. I didn't think my car was any worse than any other Rover of the same year/model so I didn't feel so bad about it.

I would consider doing it again, as either party.
posted by thilmony at 9:35 AM on March 24

I did this a few years ago, I had a situation where I needed a car for about a year, but didn't want to put the money into a purchase/lease. So I went on leasetrader and found a car for a year. At the end of the year, there was no real downside, except the fact that I had damaged the car slightly, but even that wasn't a big problem. I ended up rolling the cost of fixing into my new car payment ( not the best idea, but it worked for the situation we were in at the time).

Point is, I didn't see any downside to lease trading vs a normal lease.
posted by brent_h at 6:15 PM on March 24

by "put the money into.." I mean downpayments and the like...
posted by brent_h at 6:17 PM on March 24