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Driving Today

Weak Economy Clobbers Lease Customers

More consumers are now escaping leases for financial reasons.

The seesaw economy has had adverse effects on many consumers nationwide. Among the hardest-hit are those who have leased their vehicles. Although many drivers of leased vehicles used to seek to offload their lease obligations because they wanted to try a different car, these days pure financial pressure is the key reason. In June, 54.7 percent of drivers who escaped their leases did so because of financial reasons, according to LeaseTrader.com. This percentage was down slightly from May (56.2 percent) and January, when 62.7 percent of escapes were financially motivated, but it was well ahead of the pace that was typical prior to the onset of the recession.

Thousands of lease drivers across the country use LeaseTrader.com each month to escape an existing lease by transferring the remaining contract to someone else. Some people simply want a different car, while others want out of their lease payment for sheer economic reasons; they can’t, or don’t want to, make the payment. Lease drivers transferring out for financial reasons are spread across several vehicle categories, but it is rampant in the luxury category. Entry-level luxury, premium luxury and SUV luxury in particular are segments that see a lot of financially motivated transfers. In many cases, for example, a person will downsize from premium luxury down to entry-luxury.

“This number has always been a little bit of an economic indicator for us because it shows when people are making a change for vanity or financial reasons,” says Sergio Stiberman, CEO and founder of LeaseTrader.com.

While the current numbers reflect a depressed economy that doesn’t seem to be getting much better, the numbers told an opposite story through the end of 2007, when 68.3 percent of people said they used LeaseTrader.com because they simply wanted a different car. In 2007, only 27.1 percent said they transferred their lease for financial reasons. Since the economy slowed in 2008, the reasons have reversed, and financial motivation has consistently been the leading factor. Specifically, housing, credit card bills and job/income status are the three leading financial motivations for escaping a lease.