How to Make Money from a Car Lease

Being that it's unbearably hot outside I've decided to include a post from one year ago at this time. I think this post is somewhat relevant since a few of the big car companies are going bankrupt and we're in a recession.

June 2008

One thing I’ve seen recently, on websites such as Craigslist and Leasebusters, is people who want to get out of their vehicle leases and will offer financial incentives to anyone willing to take over. Sounds appealing – but is it a good deal?

I’ve seen ads which offer as much as $6,000 to take over a lease. Granted this was a BMW with payments over $700, but you can certainly find cheaper cars with lower payments; of course, the cash incentive (if any) will be less.

Depending on the incentive and time period left in the lease, it has the potential to save you some money. The cash incentive lowers your effective payment, thus it’s a cheaper option than entering into a lease from day one, AND you frequently can avoid paying a deposit.

Why would anyone want out, after paying large deposits in many cases?

Simple – life situations change – loss of a job or transfer to another city or the birth of a child – there are so many situations where the car could become a financial drain.

What are the costs?

There are various costs to be considered when taking over a lease: there’s usually a lease transfer fee and your vehicle insurance may be higher as the leasing company may require higher levels of insurance.

Also, watch the mileage – make sure there’s enough mileage left on the lease so that it’s worthwhile given your driving habits. If there’s only a few thousand km’s left on a lease, it might not be worthwhile.

At the end of the lease, you’ll also need to make sure you can just give the car back, if you don’t want to keep it. Some leases can hold you responsible for the decrease in value – I would prefer a ‘drop off’ lease, where you simply give the keys back.

Assuming the car has been reasonable maintained you shouldn’t be on the hook for drop in value, if applicable. As always, check the terms of your lease … do your homework!

This brings up another issue – if the previous owner badly maintained the vehicle, you could be on the hook for any drop in value. I would want confirmation from the dealer and/or previous owner that the car was maintained acceptably.

At the end of the day, I like the idea of getting money BACK when purchasing a car.

So, if you’re in the market for a car and plan on leasing, check out lease transfers – get a newer car, save the deposit AND put some cash in your pocket.

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