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Re-leasing company offers a way out For a fee, a Vancouver company finds someone to take over that vehicle By Gerry Bellett - Vancouver Sun There’s often no inexpensive way of getting out of a car lease but a Delta-based company —Leaseboys.com — is in the business of finding someone to take over the payments. For an up-front fee of $279. However, it’s likely to cost the leaseholder more than that — perhaps the price of two or three months of payments — before their unwanted lease is transferred to a third party. But it’s the cheapest way out, says Paul Monger, one of the founders of Leaseboys, whose website carries details of unwanted leases complete with pictures of the vehicles for prospective purchasers. “People get stuck with leases they can’t afford because something’s happened in their lives, they’ve lost their job, get divorced or separated, get laid off. Then they find it will cost thousands of dollars to get out of their lease, especially if they have a substantial amount of time left on it,” said Monger. “We recommend that people offer a cash incentive — say two month’s payments — for someone to take over the lease. You don’t have to do this, but we’ve found it helps,” said Monger. “I’ve seen people offer $3,000 cash for someone to take over their lease,” he said. It’s not unusual for a person — just a year or so into a lease —finding they would owe the dealership more than $10,000 if they attempted to take the car back, said Monger. “It’s not the auto dealer’s fault. It’s the way the lease works with all the interest charges being front-end loaded. The first year or so of payments goes to paying off the interest,” he said. Monger found himself in that position some years ago when he found he couldn’t afford the payments on a leased vehicle. “If I had turned it back in it would have cost me over $5,000 to get out of the lease” he said. Anyone assuming a lease has to satisfy the dealership they can afford the payments and will have to pay transfer fees ranging from $100 to $900, said Monger. His site attracts buyers looking for bargains, he said. These usually involve vehicles nearing the end of their lease whose owners can’t hang on long enough to sell the vehicles and at least break even. “Depending on the lease there are some vehicles which will have a good residual value and buyers can make themselves some money by buying out the leases,” he said. “We’ve got people using our site who specialize in that,” he said. The top five makes of vehicles sought for re-lease are Mercedes-Benz, BMW, Toyota, Chevrolet and Volkswagen, said Monger. He said the company, which began as Leasetransfer.ca, employs six people in offices across Canada.

Terminating a car lease can be harder on the wallet than filling a sport utility vehicle with pricey gasoline. Just ask the SUV drivers who want out of their lease because they can’t afford to drive the gas-guzzlers when fuel prices skyrocket. Dozens of people in this situation have called the Consumers’ Association of Canada in recent months as they try to terminate their contract and find they can’t — without losing thousands of dollars in the process. “They think they can just get out of it,” says Bruce Cran, president of the association. “But you can’t just walk away. It’s a binding contract.” Leaving a lease behind is a problem that is hardly isolated to SUV enthusiasts. Couples who get pregnant can find themselves locked into a multi-year sports car lease when they need a minivan. Employees who get transferred to another country might no longer need the vehicle they have leased for four years. The good news for these drivers is that a company in Vancouver purports to have a solution to the problem of an unwanted lease. Leaseboys is an online service that pair drivers who want to get out of a lease with people who are willing to assume the agreement. “We’re the matchmaking service. We get two people together,” says Matthew Hoffman, a Calgary entrepreneur and co-founder of Leaseboys, which is based in Vancouver. The alternatives aren’t pretty. Some dealerships will allow drivers who have a “mature” lease, one with only a year or so left, to transfer into another car with a new lease — not an attractive option for consumers who want to be released from the obligation entirely. Many contracts allow drivers to buy out the vehicle before the terms of the lease are up, but the consumer often ends up owing thousands more than the car is worth. There are also stiff penalties for ending leases prematurely. “Some lease companies will charge from six months to a full year’s lease payment upon early termination,” says an Alberta Motor Association brochure on leasing. Leaseboys say they save those drivers thousands by finding someone to take over the lease. The driver who wants out of a contract advertises the vehicle on the companies’ Internet sites and people who are willing to assume a lease can search for prospective takeovers. The system isn’t without its catches, though. The takeover still has to be approved by the dealership or the company that holds the lease, meaning the driver who is assuming the contract must have good credit. In addition to offering incentives, the original lessee has to pay a fee to the online matchmaker and, possibly, a transfer fee to the dealership. And consumer advocates like Cran warn that the driver who initially leased the vehicle still holds liability for the car in some cases, even after the takeover is approved. If the new driver doesn’t make a few payments, the first driver can still be held responsible. Paul Monger, Hoffman’s business partner, says this usually isn’t a problem, since the other driver must be approved by the dealership. The people who qualify to take over the lease usually don’t want to destroy their credit rating by defaulting on payments, he says.

A former University of Windsor grad has turned his experience with car leasing into an expanding business he expects to offer in this area within the next few weeks. Paul Monger, 32, is the co-founder of Leaseboys, a company that matches customers who want to get out of their leases with people who are looking for short-term leases. Monger, a 1992 U of W communications grad, who went on to collect an MBA from the University of Victoria, says the idea for the company grew out of a financial squeeze he found himself in when he could no longer afford to pay his car lease."We thought there has to be a better way of handling it. From there I took a look at the lease transfer business and went full force with it. We started about 13 months ago online and in the last six months began a bricks and mortar strategy to expand across the United States and Canada." Monger doesn't see his business as a threat to leasing companies, but as a business companion. He said that auto dealerships are very pleased to work with Leaseboys and can see the advantage of better serving their core clientele. "What we offer to the dealership is a chance to provide the customer another option. We found throughout Western Canada we get very strong referrals from our dealership network and that is really our base." John Sheldon, of Sheldon Central Chrysler Plymouth and vice-president of the Ontario Automobile Dealers Association, agrees it can be a good move. He doesn't see the company as competition and often there can be a good side to it. "Somebody getting out of a lease usually wants to get into another one, so what usually ends up happening is we end up with another customer," Sheldon said. The cost of doing business is $149 for an online listing or $279 for web page plus advertising and a service matching clients with cars. There are also leasing and transfer fees that range from $100 up to $1,000 for a luxury car, but average about $325. As well, people anxious to exit a lease may also offer a cash incentive that could cover a couple of months of lease payments. Monger says the average customer has 26 months remaining on a lease. For the person taking over the lease it means no down payment, a short-term lease and the right to buy out the vehicle once the lease expires. Although based in Vancouver, the company conducts business across the United States and Canada. Because of that a ‘licensee’ will be establishing an office in London and will soon be spreading the word up and down the 401, Monger says. Leaseboys can be viewed at www.leaseboys.com.