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How To Swap A Lease 2021: Get Out From Under Your Car Lease

Last updated: June 28, 2021
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a vector image of a hand holding a car lease and another hand with a road and car in the background showing how to swap a lease

Many auto buyers choose to lease for good reasons.

Leases allow them to drive a new car for a lower monthly payment.

When the lease expires, they can walk away from the vehicle free and clear.

They can lease another car and never have to worry about burying thousands of dollars of negative equity into a new loan.

Plus, they avoid out-of-pocket costs on surprise repairs and the often expensive maintenance needed on older vehicles.

While a lease swap is beneficial to both parties, it’s not for everyone.

For those who wish to transfer their leases, state law and contract provisions must allow it; auto buyers who want a short-term lease through a swap must meet qualification standards.

What Does It Mean To Swap a Lease

A lease swap is the process of legally transferring the responsibility of an auto lease from one individual or entity to another.

Once complete, the new lessee bears total responsibility for the lease.

Lease swaps are a great alternative to early termination because the cost of transferring the lease is small compared to the fees and penalties associated with ending it early.

For lessees whose financial circumstances have changed, a swap isa godsend.

For those who need a newer car for the short term, they offer a fantastic deal.

How a Car Lease Swap Works for the Seller

Before deciding on a lease swap, it’s important to check your current lease to ensure it is assumable.

Unfortunately, some leasing companies prohibit this practice, in which case you are out of luck.

You’ll have to consider early termination, trading in your leased vehicle, or riding it out until the end of the term.

If the financing company allows assumptions, you will then need to study the terms carefully.

Some lending institutions limit when a lease is assumable (many prohibit transfers near the end).

Also, many require the new lessee to meet minimum credit standards.

Leases may also require you to transfer ownership only to residents of the same state.

Provided the transfer is allowed, the next step is to find out about any costs, such as transfer fees, that may be required to complete the transaction.

Depending on the deal you strike with the lease buyer, you may pay the fees or gain the agreement of the buyer to cover those costs.

Of course, success is contingent on finding a buyer for your lease.

Lease swap websites can save you weeks and months or advertising and frustration.

They already have a target audience and system prepared for you to advertise your offering.

In addition, you can avoid headaches like checking credit, verifying income, and creating a contract because the swap company handles these key tasks.

Though there is no guarantee you will find a match for your lease swap offer, your chances are better when going through a reliable broker.

Typically, for a person to take over your lease, the finance company will require that he or she meet the same credit standards that you did when you began your lease.

The leasing company usually checks a potential swap buyer’s credit before granting a lease transfer request.

If you find a match, you and the new lessee finalize the paperwork to complete the transfer.

Usually, the new lessee must register the car in his or her name and pay any related fees, including applicable sales tax.

How a Lease Swap Works for Buyers

If you want a short-term auto lease, a lease swap is convenient and cost-effective.

Rather than searching dealerships for lease opportunities, you visit a lease swap company’s website and search the inventory in your area.

You can narrow your search criteria by location, vehicle type, and price.

Chances are good you will find something within your price range.

Next, you’ll need to consider the length of the lease and the allowable miles.

As you will be assuming the terms agreed to by the former leaseholder, you must consent to the number of months and miles remaining on the lease.

These vary by how long the former leaseholder signed, the length of time he or she has had the lease, and the number of miles on the vehicle.

For example, assume the former leaseholder took out a 36-month lease with a mileage limit of 36,000 (12,000 per year).

He is offering the lease with 15 months remaining and 24,000 miles on the vehicle.

You must commit to the car for 15 months and agree to drive no more than 12,000 miles (800 miles per month) unless you are willing to pay the penalty fee for excess mileage.

If the terms of the lease swap suit your time horizon and driving habits, it may be a good choice.

However, it is important to remember that you assume all responsibility for the lease.

If you later decide you want out of the lease early, you will need to pay the early termination costs.

Lease Swap Versus Traditional Leases

Lease swaps allow you to lease a vehicle for a much shorter time versus a traditional lease.

Traditional leases typically run between 24 and 39 months, though some go longer.

Traditional leases are a better option than buying a car for low mileage drivers who intend to keep a vehicle for a short time, such as two or three years.

They avoid the negative equity buildup that occurs when vehicle owners trade in cars in just a few short years.

But what if 24 to 39 months is too long for you?

Perhaps you need the vehicle for six months or a year? In that case, a traditional lease is too long.

However, a lease swap can provide just the right amount of time.

The key is to choose a swap that meets your mileage requirements.

For very short-term leases, such as less than six months, even lease swap opportunities may be too long.

In those cases, long-term rental car contracts may provide the solution.

For example, Hertz offers discounted rates for rentals by the month, with additional discounts for rentals lasting over 63 days.

The monthly cost will be substantially higher than a lease swap, but there are no mileage limits of fees.

How Much Does a Lease Swap Cost?

For the lease seller, the swap lease costs the fees imposed by the lending company and any charges from the lease swap broker.

The cost for lease buyers varies by type of vehicle.

Since you are taking over the remaining months on a current lease, the monthly payment is already set, so the term you assume has no impact on the monthly cost.

However, the amount of mileage remaining on the lease can have a drastic effect if you exceed it.

Many economy cars can be leased for close to $200 per month, while more midrange vehicles lease between $300 and $600.

Luxury vehicles may cost closer to $1,000, and sports cars and other high-performance cars may cost several thousand.

Benefits of a Lease Transfer for the Seller

Lease swap sellers can save thousands of dollars in termination fees.

The amount saved is often much higher if the lease they signed has strict terms.

For example, some leases have no early termination clause.

Instead, the owner must pay the remainder of the lease in its entirety.

In those cases, the leaseholder is always better off swapping the lease if possible.

Leaseholders also avoid the necessity of trading in the vehicle before the lease term expires.

Much of the benefit of a lease is preventing the buildup of negative equity.

However, when the owner trades in the car before the lease expires, the opposite occurs.

The lease then has negative equity, which the buyer must roll into a new lease or loan.

In addition, trading in the vehicle provides no help for leaseholders who no longer need a car or want to reduce or eliminate monthly payments.

In most cases, payments after trading in a leased vehicle before the end of the lease will be higher.

Benefits of a Lease Transfer for the Buyer

Lease transfer buyers benefit when they find a deal with the correct time frame and mileage.

Firstly, they get new or nearly new cars.

Because lease swaps allow the buyer to change cars in a matter of months or one or two years, he or she can drive a new car all the time without spending a fortune.

Secondly, the lease buyer’s commitment is short enough to accommodate rapidly changing life situations.

For example, if you need to change from a sports car to a minivan, it’s only a short time until the lease expires and you can get a new car.

Thirdly, there are many financial incentives.

Because the buyer has already placed a down payment on the lease, these deals have little or no upfront cost.

In addition, some lease sellers even offer cash incentives.

Finally, lease buyers gain the same benefits as the original leaseholder.

These include the manufacturer’s warranty and incentives on future leases.

Lease Swap Companies

Many lease swap companies run thriving businesses because they fill an important need.

Leases are great opportunities for certain vehicle buyers to minimize their costs and increase flexibility to change autos more often.

However, when circumstances change unexpectedly, early lease termination has always presented a challenge.

By providing a marketplace where lease swaps can occur legally and safely, these brokers offer benefits to both lease sellers and buyers.

Swapalease, LeaseTrader, and QuitaLease are three well-known players in this industry.

These websites list thousands of vehicles available for lease swap.

Their fees include a membership fee for lease buyers and transfer fees charged to sellers.

For example, the membership fee allows buyers to browse and negotiate terms with sellers and cover the costs of credit verification.

On the other hand, sellers pay a price to create a listing and for the transfer process.

Frequently Asked Questions

Does a Lease Swap Affect Your Credit?

For lease sellers, a lease swap removes the obligation of the lease from their credit reports, while lease buyers receive a new tradeline reflecting the lease.

Do You Need Good Credit to Swap a Lease?

The short answer is yes because leasing requires at least decent credit, and if you buy a lease swap, you must at least match the creditworthiness of the leaseholder.

However, perfect credit is not required, and leases for different credit levels are available.

Can You Negotiate on Swapalease?

Swapalease puts you in contact with a potential lease swap partner. You can then negotiate with that person.

For example, buyers and sellers often negotiate who pays the lease transfer fee.

Can I Swap a Lease for a More Expensive Car?

If you sell a lease, you certainly can then lease a more expensive car, provided you can afford it.

For lease buyers, you also can lease a more expensive vehicle once your current lease expires.

Wrapping Up

Leases may provide significant benefits to those who want hassle-free, newer vehicles, but they are a headache if you want out early.

Thankfully, many auto buyers are willing to assume leases because they want a short-term option that is cheaper than a rental car.

Lease swap brokers facilitate these transactions for a fee, which is a bargain compared to what the buyers and sellers gain from the deal.

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