Pros and Cons of Lease Swapping

The beauty of leasing a car lies primarily in the opportunity to drive more car than you could generally afford to buy. This has enticed many individuals into doing so. However, people sometimes find they can either no longer afford the payment, or the car doesn't suit their lifestyle. 

As a result, lease transfer companies have emerged to fill this need. This represents a great opportunity for you to get into a low-mileage late model car at an advantageous price - as long as you're aware of the pros and cons of "lease swapping." 

Pros of Lease Swapping

Driving an Expensive Car for Less Money

You get access to a lot more car for the money with a lease. This can be even better when you take over another person's lease - depending upon where they are in the term. Let's say you take over the lease on a $43,000 Jeep Grand Cherokee at the rate of $499 per month. 

The original lessor took advantage of one of Jeep's 42-month lease deals and got that great rate, but then needed to change vehicles halfway through the term. This means you could drive a $43,000 Jeep for 21 months for approximately $10,479 if you took over their lease. You'd also have the option of purchasing the Jeep at the end of that time period for its pre-determined residual value.

Driving a "Used Car" Under Warranty

Sticking with our Grand Cherokee example, Jeep models come with a five-year/60,000 mile powertrain warranty. This means anything that goes wrong will be attended to at no charge to you - even when you take over the lease from the original lessor. 

Roadside Assistance Service - providing battery jumpstarts, roadside fuel delivery, flat tire service and towing to the nearest dealer should the car become completely disabled - is also included. 

You'll be hard pressed to find a used car you get into for under $11,000 with all of those protections. In some cases, original lessors even get extended service contracts, which cover basic maintenance services at no additional charge too.  

Cons of Lease Swapping

Potential Abuse

You have no way to truly know how the person from whom you're assuming the lease treated the car. Nor do you have any guarantees they maintained it by the book. Yes, you can ask for service records, and you can do a VIN search to see the car's history, but you can never truly know. 

This is why an inspection by a qualified mechanic (which you should always get when you buy any used car - and that's what you're doing here) should always be performed before you agree to make a deal on a car. 

And you do have the protection of the warranty, if the mileage is in line. 

Mileage Limitations

You'll agree to the same mileage cap the original lessor took when they accepted the deal. In our scenario above, that was 12,000 miles per year, with an understanding there would be a charge of twenty-five cents for each mile over a total of 42,000.

You'll be limited to less than 1000 miles monthly (depending upon how far over they are) if you assume the lease at the 21-momth mark and the Jeep has more than 21,000 miles on it. This means you could be looking at an additional charge of twenty-five cents a mile when you turn the Jeep in at the end of the contract. 

Fees and Taxes

Granted, you'd run into these costs even if you leased the car from new on your own. However, if you're looking for a bargain, it's best to know they're a possibility up front. 

Some states treat lease transfers the same way they do sales and will want a sales tax cut. You'll also be on the hook for any excess wear and tear charges, along with the disposition fee (if it wasn't paid up front) when you turn the car in. There's also the fee the transfer company will impose for facilitating the transfer. 

So, do the pros and cons of lease swapping balance each other out for you? They can - if you do your homework, choose carefully and understand just exactly what leasing a car means.