JOHN YDSTIE, host:
On Fridays we talk about your money.
And today we'll talk about car leasing. Seventeen million vehicles are leased in the U.S. these days. That contract can also be a trap. To get out, you have to pony up hefty penalties, unless you choose to trade in your lease online. There are now Web sites that match people who want to get out of leases with people who will take them over.
Here is NPR's Jack Speer.
JACK SPEER: Dawn Oldenbuttel lives in Charlotte, North Carolina. When gas topped $3 a gallon, she decided it was time to get rid of her beloved Land Rover SUV, which got roughly 14 miles to the gallon.
Ms. DAWN OLDENBUTTEL (Resident, Charlotte, North Carolina): My husband is self-employed, and through the advice of our accountant we were told that maybe leasing would be a good idea. And so we signed on for a four-year lease with the Volvo XC90.
SPEER: But almost immediately Oldenbuttel regretted her decision. While the Volvo got better gas mileage, it didn't sit as high or have all-wheel drive. But when she called the dealer to find out whether he would buy the car back, she received a rude financial shock.
Ms. OLDENBUTTEL: Well, after I checked in to what I owed on the car, I called the dealership and said, all right, if I wanted you to buy the car back, what's the car worth? And there was roughly a $7,000 difference in what the car was worth versus what I owed on it.
SPEER: So Oldenbuttel began surfing the Web, where she stumbled upon several companies that for a fee would advertise her car to people looking to lease. Through one of those companies, Miami-based Lease Trader.com, she found someone willing to take over her $636 a month lease payment.
Sergio Stiberman is the founder of Lease Trader. He says sites like his are far cheaper than ending a lease early.
Mr. SERGIO STIBERMAN (Lease Trader.com): If you look at what it will cost the person to get out, which is, you know, 200-and-something dollars, 230, $240, by the time it's all said and done it's very inexpensive compared to thousands and thousands that it will cost you to prepay the lease.
SPEER: But while Lease Trader and its competitors offer a legitimate service, critics say getting out of a car lease often isn't as easy as the online sites make it appear.
For instance, the lease contract may require the original leaseholder's name to remain on the lease even after it's been transferred. You could get rid of the car and the payments only to discover you're still on the hook.
Elaine Litwer is with the National Vehicle Leasing Association.
Ms. ELAINE LITWER (Legislative Consultant, National Vehicle Leasing Association): Depending on with whom you wrote your original transaction, you are now like a co-buyer. And that means that you have to have some due diligence as to whether they are continuing their obligation, because you might be called upon to step in and take back that vehicle.
SPEER: In Florida, there have been a number of complaints filed with the attorney general's office by consumers who say they weren't adequately warned about how the deals work. Honda, Chrysler, Nissan and Bank One all require the original leaseholder's name to stay on the contract. Other companies prohibit lease transfers altogether. And there can be additional fees and taxes beyond what the online sites charge.
Dawn Oldenbuttel says she was fortunate her leasing company let her take her name off the lease. She says she can't understand being legally liable for a car being driven and paid for by someone else.
Ms. OLDENBUTTEL: I can't imagine doing it. If that was the case, I would just, you know, suck it up and deal with it and pay, you know, pay on it, drive it and do what you have to do, and then just don't make the mistake again.
SPEER: So if you have a leased vehicle and want to get out, either make sure your name gets taken off the lease or be prepared to monitor the payments very carefully.
Jack Speer, NPR News, Washington.
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