MIAMI (Aug. 4, 2010) — A car-leasing website claims that one year after the federal government's popular “Cash for Clunkers” vehicle trade-in program, many owners who participated are looking for ways “to escape the auto lease just one year into their five-year commitment.”
Miami-based LeaseTrader.com reported “a significant trend in inquiries” from people who leased a car with a Cash For Clunkers rebate after being “lured by the idea of receiving a $3,500 or $4,500 rebate from the government.” Some 700,000 vehicles were sold or leased during the program, which was an attempt by the government to kick-start a struggling economy deep in recession.
For many people this was an opportunity to trade in an old, inefficient vehicle for a new car lease with better fuel efficiency, LeaseTrader.com said, even though this meant adding a monthly car payment after many years of enjoying a fully paid-off car.
In order to qualify for a lease through the 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, LeaseTrader.com said. “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.”
Sergio Stiberman, CEO and founder of LeaseTrader.com, said in a company press release that “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. 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.”
The company said that since May, the majority of Cash for Clunkers inquiries it has received have been from owners of Toyota Camry, Ford Escape and Honda Accord vehicles.
LeaseTrader.com, founded in 1998, matches car shoppers with individuals looking to escape their auto leases.