The pros and cons of ending a lease

It can make sense to get out early but the new lessee must watch out for some curves. Bert DeSouza enjoyed driving his 2006 Subaru Legacy GT wagon until a job change that allowed him to work at home meant his expensive Subie would languish in the garage. It was time to part company — a formidable challenge when you’re leasing. “I had 11 months left on the lease at $606 per month. Returning it early would have required paying a penalty in the thousands,” says DeSouza. Like a growing number of Canadians, DeSouza advertised his car and his lease on a lease-takeover “remarketing” website and found a willing second lessee. To help grease the transaction, he offered the new lessee $1,250 cash and paid the transfer fee (about $400); in return, DeSouza was released from his contractual obligations. “For the original lessee, it represents an alternative to the tyranny involved with early lease termination where it sometimes feels like the dealer and automaker want a pound of flesh,” says George Iny, president of the Automobile Protection Association. “Typical cost for an early lease return runs in the $2,500 to $5,000 range — with $10,000 not unheard of for a prestige vehicle or for someone ending a lease in the first year.” At the same time, used-car shoppers are turning to lease-takeover services to find late-model used cars and trucks as an alternative to scanning the classifieds and looking online for used vehicles to buy. “Savvy people are using the site,” says DeSouza. It’s especially useful if you’re looking for luxury vehicles or hard-to-find specialty models, he notes. Mississauga-based Leasebusters.com pioneered the lease takeover concept in 1990 and dominates the market today, but there’s no shortage of competition. Rivals include Easyrelease.ca, Leaseexperts.ca, LeaseTakeOvers.ca and Ontarioleasing.com, among others. All the sites function the same way: vehicles and leases are advertised to draw present and future lessees together; all that seems to differ is the service fee. Leasebusters charges $295, while newer firms tend to undercut that price to build traffic. In reality, anyone can advertise their lease in any classified listings, such as Craigslist and Kijiji, often at no cost. It’s no secret leasing will get you into a new automobile at a relatively low monthly payment, since you’re essentially renting the car. A lease takeover is attractive because the original lessee may offer a cash incentive — it’s cheaper...
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