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Retirement with no car lease

By Jennie L. Phipps · Bankrate.com
Thursday, October 28, 2010
Posted: 3 pm ET

If your retirement planning doesn't leave enough money to pay off the car lease you committed to when times were better, here's a possible solution.

LeaseTrader.com, a website that helps people get out of leases they don't want anymore, notes that baby boomers are among their best customers. About 29 percent -- up from 21 percent last year -- of their 75,000 listings this year are from boomers, mostly people hoping to unload a luxury car.

John Sternal, marketing vice president for LeaseTrader, says since the company began in 1998, the bulk of their customers have been young people who either stretched too far when they leased, or they got a big promotion and wanted to move into something more luxurious. But the business has been different in the last year or so, with lots more customers who are in retirement and downsizing or just losing their jobs and no longer able to pay the bills.

It works like this at LeaseTrader.com and similarly at its rival Swapalease.com. Let's say, you have 10 more months on your car lease contract and you're paying $600 per month, so the balance of the contract is $6,000. These sites will advertise your car so you can find someone interested in taking over your lease. Once you find someone who is seriously interested, you negotiate. The potential leaser may say, "$600 is too high" and ask you to kick in an additional $1,000 to lower his payment. If you agree and reach a deal, you -- as the original leaseholder -- write a check for whatever the incentive is and then you're out of the lease. The new leaser takes over the car and the terms of the contract.

Your leasing company probably won't tell you that this kind of business exists, but they will be involved in the transaction. "It's all legal," Sternal says.

LeaseTrader charges the original leaseholder a minimum of $89 to post on its website and $149 when someone is found to take over the lease. They charge the new leaser $39 to join the website and a $149 commission. The original leasing company also may have charges to transfer the car from one leaseholder to the other. These can be as much as $500 for a luxury car.

Sternal expects business to be good for his company going into the new year, because there are a lot of retirees and downsizers in this economy.

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