Piston Slap: The Terminal Lease
Peter writes:
My question is about getting out of a car lease.
Last night I was speaking to a recent widow. A few months before her husband died, he had taken out a lease on a 2010 car. She still has 14 months to go on the 36-month lease for a 2009 Toyota RAV4. She doesn’t need to carry the lease on two vehicles and wants to hold on to the newer one.
The RAV4 has 18,000 miles and the lease is $359 a month, which is high (there’s no deposit). That leaves about 18,000 miles for someone to take it over before it expires in Feb. 2012.
She’s listed it with Swapalease and isn’t getting any interest there. I’ve also mentioned Leasetrader.com, CarLeaseDepot.com, and EasyRelease.com as alternatives, but don’t know their reputations. And of course there is Craigslist.
Can you think of other alternatives that might be helpful for getting out of this, including negotiation with Toyota Financial if such a thing is possible? Thank you.
Sajeev Answers:
I see negotiation with Toyota Financial as hit or miss, is there any motivation for a sales/customer service person to tell you what you need to hear? Odds are talking to a lawyer familiar with estate planning is probably a better way to find out the truth about ending a lease in your state. I can speculate, but this time I’d prefer not to.
Getting out of a lease is ugly, and that’s by design. And a lease on a boring (sorry) car is a hard sell, especially with the down payment (wisely) rolled into the deal. A would-be buyer would prefer the seller had the low payment, and I am sure they can find plenty of “comps” where the seller wasn’t savvy enough to roll in the down payment into the (usually) low lease money rate. There are reasons why leasing is normally suited to upper-echelon cars, and this is one of them.
Unfortunately, I think this lady is out of luck. She will need to sell it for cash and eat the negative equity that surfaces after the ink dries on the paperwork. It’ll be painful at a Carmax type of trade in, a little less hurty with a private party sale at AutoTrader.com or Craigslist.
She doesn’t need two cars, so sell the one that has less negative equity on the deal. If this was an S-class Mercedes with a super low monthly payment, my advice would be different.
Send your queries to mehta@ttac.com. Spare no details and ask for a speedy resolution if you’re in a hurry.
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Thanks everyone. My acquiantance no longer has a problem, though. Last night I found out she got into an accident with the newer car. She's fine, but the car is totaled, and she's going to use the Rav4 until the lease ends. I guess it's "car-ma" but at least it's resolved. I knew that turning to TTAC was the right idea. The idea of being stuck in an onerous lease is one I haven't seen discussed in practical terms anywhere else. Each of you -- even GS650G -- brought up things that important questions, like estate issues and the lack of clarity on a spouse's fiscal responsibility. Also, the idea of women dealing with car leases and loans solo is a relatively new phenomenon. As late as 1977, my mother -- who earned half the household income -- couldn't get a car loan without my father's co-signature with GMAC or their bank. I remember the GMAC guy was quite smarmy about getting the business. But when he wouldn't agree to reasonable terms only in my mom's name, it became his loss. My parents then switched accounts to a bank that agreed to make her the loan at the going rate. The fact that such a thing could happen seems unthinkable now.
Don't tell Perisoft about this, he might claim I had something to do with it. I know someone that was in a terrible lease until a well timed rainstorm and slick road helped him find a way out of his lease he had not considered. Sometimes unconventional solutions present themselves.