Individuals will typically enter a car lease agreement because they prefer the flexibility of a short term commitment and lower monthly payments versus purchasing or financing a vehicle of equal value. In some cases, people find they need to terminate their lease early and do so through a lease swap. A lease swap will allow someone else to take over the lease, but there are still financial repercussions to be aware of if it is not executed by the book. This article will provide tips on how to enter a lease swap and provide answers to the following questions:
- Is there a difference between a lease transfer, lease swap, and lease assumption?
- What is the best service to use for a lease swap?
- What kinds of things should I be aware of before lease swapping?
Is There a Difference Between a Lease Transfer, Lease Swap, and Lease Assumption?
A lease swap, also known as a lease transfer or lease assumption is a process in which an auto lease is surrendered from the current driver of the vehicle to another driver of their choosing. By having another driver take over the remainder of the lease, there’s a better chance of avoiding penalties and fees that would normally be charged if the lease underwent early termination.
How to Swap a Lease
Before beginning the lease swap process, it is essential to confirm with your finance company that it is possible. Automakers such as, Acura, Hyundai, and Kia have their own financing companies that do not allow transfers. Even if you go through with the transfer, some companies like Volkswagen and Audi will hold the original lessee (original holder of the lease) responsible if the new driver stops making lease payments or totals the vehicle.
Once it’s confirmed that the lease can be transferred, ask about any fees, such as transfer fees that you may be charged with as part of the process. It is then the original lessee’s responsibility to find someone to take it over. Friends or family might make the most sense, but if that’s not possible there are several online options where drivers can advertise and create listings to find a suitable new driver. Refer to the “Best Websites to Swap a Lease” section if you’re interested in using an online resource to assist with your lease assumption.
When a potential lessee has been found, they will have to undergo a credit check. Whoever assumes the lease will generally need to meet the same credit standards you were required to meet before entering into the original lease. Assuming the new lessee’s credit score is high enough and they can afford the monthly payments, they will be able to take over the lease with the same terms and interest rate as the original lessee. If all parties involved are happy with the lease arrangement, any paperwork required by the leasing company can be completed to formally swap the lease. To finalize the transfer process, the new lessee will need to visit their state’s department of motor vehicles to transfer the registration, obtain a new license plate if required, and pay any related fees. Depending on the state, this can include sales tax.
Here is a helpful video explaining lease swapping:
Best Websites to Swap a Lease
An easy way to find someone to take over your lease is to pay for a listing on a lease-swapping site. These websites specialize in matching sellers to buyers and executing lease deals because they already have an audience who is interested in taking over a vehicle lease. Another advantage is that they will provide tools to calculate costs associated with a specific transfer and handle any required paperwork. The two most reputable companies in this space are LeaseTrader and Swapalease. Both of these companies charge sellers a fee to list their lease. Buyers can browse for free on each website but will need to pay a fee to register if they wish to contact any leaseholders. Below you will find a comparison between LeaseTrader and Swapalease.
Listing fees for sellers:
- $99.95 for a 15-photo listing
- $199.95 for 7 days of high exposure
- $249.95 for 30 days of high exposure
*High exposure is a combination of social media marketing, listing the AD under suggested results, and placing it in prominent galleries on the site.
Successful lease transfers will result in a $149.95 commission fee. All fees paid to LeaseTrader are non-refundable — that’s whether or not your lease transfer is successful.
- $9.99/month for six months
- $14.99/month for three months
- $19.99/month for two months
- $34.99 for one month
LeaseTrader.com charges buyers a commission fee of $149.95 for a successful lease transfer. The fee includes a free credit report.
Listing fees for sellers:
- Standard: $74.95 for a 1-photo AD, plus a $150 “success fee”
- Swapper’s Club: $199.95 for a 12-photo AD, includes the “success fee”
- Swapper’s Club Gold: $299.95 for a 36-photo, two-week featured AD, includes the “success fee”
- Swapper’s Club Platinum: Call Swapalease for pricing
Any fees paid to Swapalease.com are nonrefundable
Buyer fees: Swapalease will charge users $59.95 a one-time registration fee. Buyers will also receive a free credit report.
NOTE: Neither LeaseTrader or Swapalease verify vehicle listings for the accuracy or perform vehicle inspections. It is both parties’ responsibility to verify vehicle information before entering a lease transfer.
Craigslist or Facebook Market are other resources that will likely have lease swap listings. Keep in mind though that these are person-to-person transactions and you will be responsible for obtaining all the necessary information and executing the lease takeover.
What to Beware of when Swapping a Lease
Before going through with a lease swap, consider the following factors:
You assume the original lease terms
Typically when taking over a lease, the new driver also inherits the original terms of the leased vehicle. This includes the monthly lease payment, months remaining on the lease, as well as any mileage limits. Note what the interest rate is, because you may be able to pay a lower rate if you were to get a new lease or finance a new vehicle on your own.
You become responsible for the car’s condition and mileage
A car lease transfer might be a driver’s way to get out of their lease if they’ve driven more miles than they originally anticipated, or put a lot of wear and tear on the vehicle. As the new lessee, you may only be left with a few thousand miles for the remainder of the lease and will be penalized for any excess miles, generally 10 to 25 cents per mile, at the end of the lease. You’ll also be liable for any damages to the vehicle, such as dents, stains, or cracked windows when returning the car to the dealership.
Before entering into a lease swap, it is a good idea to obtain a vehicle history report to verify the vehicle wasn’t involved in any accidents. You should also ask the original lessee for maintenance and service paperwork to confirm they complied with the required upkeep detailed in the lease agreement.
At its core, a lease swap can benefit all parties involved. The original lessee can transfer it, move on and maybe recoup some of their down payment, while the new driver assumes the lease and can meet their vehicle needs at a potentially lower overall cost than a long-term lease or purchasing a new car. When looking into any kind of car shopping, make sure to do your research and explore all options before picking one. A lease swap may end up not being the right fit for you, and you could look into traditional auto financing or purchasing a less expensive used car.
Refinancing Your Auto Loan with WithClutch
If you decide against a lease swap and ultimately finance with an auto loan, find out how you can lower your loan payments using WithClutch! WithClutch can help save you money and time by allowing you to refinance from the comfort of your home in less than 20 seconds. WithClutch offers services for several makes; BMW, Lexus, Mercedes-Benz, Nissan, Toyota, and Subaru, just to name a few. If this is something that appeals to you, follow these simple steps to begin your refinance journey!