MIAMI – LeaseTrader.com reports a significant trend in inquiries from people who leased a car with a Cash for Clunkers rebate looking to escape the auto lease just one year into their five-year commitment.
With the incentive of receiving a $3,500 or $4,500 rebate from the government, close to 700,000 vehicles were sold or leased during last year’s Cash for Clunkers program. For many people, this was an opportunity to trade in an old, inefficient vehicle for a new car lease with better fuel efficiency, even though this meant adding a monthly car payment after many years of having a fully paid-off car.
In order to qualify for a lease through the Cash for Clunkers program, a car shopper needed to sign up for a lease with a minimum of five years. Fewer than 20 percent of all Cash for Clunkers participants were lured into leasing deals that came with either a $3,500 or $4,500 rebate. But after the initial luster wore off people now realize these contracts were a mistake. One year later LeaseTrader.com has been fielding calls from drivers evaluating their options for lease transfer.
“It will be difficult for these people to exit their lease because there is very little market for a used car with three or four years left,” said Sergio Stiberman, CEO and founder of LeaseTrader.com. "Many of these people didn’t have a car payment when they took advantage of the rebate. Now they have a monthly payment and five-year commitment, which is extremely unfavorable in a leasing environment."
Since May, the majority of Cash for Clunkers inquiries into LeaseTrader.com have been drivers of Toyota Camry, Ford Escape, and Honda Accord.