In these difficult economic times there’s a lot of talk about “voluntary” foreclosures on houses and condominiums. Now that has extended to the car business as well.
Car lease expert LeaseTrader.com says the number of people voluntarily walking away from their car lease contracts has tripled in the last 12 months.
Since the recession began in early 2008, more than two-thirds of all lease swaps were by people in financial distress from job loss or skyrocketing bills. But over the last 12 months, a growing percentage of people are opting to escape their auto lease even though they’re fully capable of paying the contract.
These consumers are looking to head off potential economic disaster before it swallows them.
“There are plenty of people out there looking to exercise their own personal financial pruning,” said Sergio Stiberman, CEO and founder of LeaseTrader. “The trend began with homeowners underwater on their mortgage walking away from their homes. But today, there are other areas of a person’s finances where they’re making the decision to walk away from their obligation.”
To be fair, there are differences between walking away from a mortgage and car lease.
Services like LeaseTrader help people find a credit-qualified car shopper willing to adopt the remaining portion of the leasing contract with no harm to the leasee’s credit. Voluntarily walking away from a mortgage may entail financial and litigation penalties from the lender.
In years past, Stiberman says his company catered to people who wanted out of a lease to upgrade their vehicle or whose financial distress forced them to seek a transfer of that payment obligation. Today, a third group has emerged: They can still afford to make their car lease payment, yet they have no problem defaulting on an auto lease contract -- with no plans to replace the vehicle. Many of these people are downsizing to shed excess cars accumulated during more prolific economic times.
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