You're really up against it.
You've just learned it will cost you $8,000 to end your auto lease early and you really, really need to get out of the contract.
And then it hits you. Why can't you transfer the lease to someone else? You could be rid of the car and the payments in one fell swoop.
If only it was that simple.
"It's a mistake for people to think there's an easy way to get out of a lease," says Remar Sutton, president of Consumer Task Force for Automotive Issues.
Know the costs and potential costs
Transferring a lease to someone else is not cheap, easy or risk-free. In fact, the whole process makes a lot of consumer experts awfully nervous. There are loads of things to worry about when transferring a lease.
First off, some leasing companies, including Honda Finance and Chrysler Financial, don't allow lease transfers. So step one is finding out if the lease you signed lets you transfer your agreement to someone else.
"Read the contract very carefully. Your legal rights are controlled by your contract," says Douglas Walsh, senior counsel in the Attorney General's Office of the State of Washington.
Some finance companies won't let customers transfer leases in the first 12 months or the last 12 months of a leasing term. So if you're six months into a lease, you have to tough it out a while longer. And if you've got 10 months to go on a lease you might just have to suck it up and make the rest of your payments.
And some banks won't allow lease transfers in the first six months or the last six months of a leasing term. Again, be sure to check your contract. If you have questions, call the leasing company.
A key thing to worry about with lease transfers is the whole issue of liability. Many finance companies that allow lease transfers still hold the original customer liable for missed payments and damage to the car.
So if the person who takes over your lease skips payments or refuses to pay excess wear-and-tear or mileage charges, the leasing company can come back to you and demand payment. You could end up making payments on a car you haven't driven for months.
"You wind up with all the downsides and no access to the vehicle," Walsh says.
Plus, your credit could get pretty scuffed up if the new leasing customer doesn't pay or pays late. After all, your name is still on that contract.
And things could get even stickier if the new leasing customer lets their auto insurance lapse.
"What if a vehicle is totaled or stolen and the new person did not maintain insurance? That could come back to haunt the original person," Walsh says.
Because so many finance companies keep the original leasing customer on the hook, it's a good idea to transfer a lease to someone you know and trust, such as a friend or relative.
"You'd have to have very implicit trust in the person you're sloughing this off to," says Jack Nerad, author of
The Complete Idiot's Guide to Buying or Leasing a Car.
Less hazardous leases
Other lease transfers are less hazardous to your financial health. Some finance companies, including GMAC Financial Services, will shift liability for a leased vehicle over to a new leasing customer. So the original leasing customer would be in the clear once all the paperwork goes through.
The lease transfer process can take anywhere from a couple of weeks to a couple of months. So it's not always a quick fix to a cash flow problem. And let's not forget about the fees.
The cost of transferring a lease beats shelling out thousands of dollars in penalty fees for ending a lease early, but it's still not cheap.
Lease transfer fees range from $35 to $595. Most finance companies charge these fees.
A finance company also must approve the credit of the person taking over a lease. Some finance companies charge credit application fees ranging from $25 to $250. The person who is looking to exit a lease often ends up paying this cost plus the lease transfer fee.
And if you're really desperate to get out of a lease, you'll want to sweeten the deal for a new leasing customer. Lots of people pay cash incentives of $500 to $1,000.
You may have a tough time finding someone who'll want your car. Lots of people end up advertising in local newspapers. Some online sites can help you out here as well for -- you guessed it -- more fees.
Swapalease.com charges a $49.95 listing fee to lease "sellers" that place ads on its site. It charges a $95 lease transfer fee once a lease "buyer" and "seller" from the site begin the transfer process, a process Swapalease.com promises to speed along.
"We can cut one to three weeks off the process," says Ron Joseph, chief executive officer of Swapalease.com.
Swapalease.com also lists the lease transfer policies of more than 85 major leasing companies on its Web site.
Leasetrading.com takes care of any transfer fees and any credit application fees, but it charges a lease "seller" a fee equal to 5 percent of the remaining payments due on the lease.
Say you had 18 months to go on a lease and a monthly payment of $300. You would pay Leasetrading.com $270 for helping you to connect with a lease "buyer" and for coordinating the paperwork process.
To trust a stranger
The downside to visiting an online site is you end up paying even more money in fees. You're also trusting the lease transfer and the lease transfer process to strangers.
Mark Eskeldson, consumer advocate and author of
Leasing Lessons for Smart Shoppers advises people who want to transfer a lease to do it on their own.
"If the lease is legally transferable then call up the lender and say 'I want to transfer a lease,' " Eskeldson says. "I wouldn't trust anyone else to do it."
Consumer experts also are leery of using the Internet to locate a lease buyer.
"It's bad enough to try this type of transaction with someone you know," Nerad says. "If you're putting your credit in the hands of someone you don't know through the Internet, it becomes more iffy."
To make things a little bit less "iffy," Swapalease.com offers some of its customers lease default protection from Great American Insurance. The product is aimed at lease sellers who remain "liable" for a vehicle after a lease transfer.
Great American Insurance will step in and pay end-of-lease fees, including excess mileage and wear-and-tear charges and disposition fees, should the new leasing customer fail to pay.
The company also will step in and pay if the leased vehicle gets repossessed and the finance company is looking to collect the remaining monthly payments from the original leasing customer.
Lease default protection is currently available to lease "sellers" living in Ohio, Kentucky and Indiana.
The cost of coverage varies. A lease with a $250 monthly payment, 18 months remaining and a $500 disposition fee would cost anywhere from $190 to $555, depending on the credit score of the person taking over the lease, according to Tara Webb, a product specialist at Great American Insurance.
While this kind of coverage may give a lease seller some peace of mind, it also bumps up the cost of transferring a lease.
When all is said and done, you could end up spending $2,000 or more to transfer a lease. That's not exactly small change. And that's money you could keep if you stick out your lease.
"Make all the payments until the lease is up," Eskeldson says.
"And chalk it up to experience."