- The Washington Times - Friday, July 20, 2001

You're suffering from midlife crisis. You've just got to buy that Porsche, but you don't want a long-term commitment. How do you get the car of your dreams for a short time? Or your dot-com just went bust, leaving you broke and stuck with lease payments on your Porsche. What do you do to dump the expense?
It's an ideal match for a relatively new Web site at www.swapalease.com. The site, operated by the Joseph Automotive Group, which owns 18 dealerships in the Cincinnati area, puts together people who want out of their vehicle leases with those who want short-term, affordable leases.
"We see all kinds of circumstances people who lost their jobs, couples getting married, families with twins on the way, the guy whose employer gave him a company car or the person who just has to have the new Chevrolet Tahoe but is driving the old body style," said Swapalease Chief Executive Officer Ron Joseph.
Swapalease comes at a particularly good time, as attractive leases have been difficult to find. Automobile manufacturers and financial institutions, some of which have abandoned automotive financing altogether, have backed away from offering low monthly lease payments. Art Spinella, director of research for CNW Marketing Research a Bandon, Ore., firm that tracks leasing trends estimates financial institutions lost $11 billion last year by wrongly forecasting residual values, the value of the vehicle after the lease expires. As a result, financial institutions have gone conservative in estimating residual values, resulting in a substantial increase in monthly lease payments. "It's worse than sticker shock ever was," Mr. Spinella said.
Swapalease is simple and inexpensive to use. The person who wants out of a lease fills out a five-step questionnaire to establish a Swapalease account. The person provides a vehicle description, mileage, months and mileage left on the lease monthly payment, and a photo. After the one-time fee of $49.95 is paid by credit card to list the vehicle, the person can log on daily to check activity of the listing.
The driver shopping for a short-term lease can browse the Web site by make, model, time left on the lease, monthly payment and geographic location. A $19.95 fee gives him or her information to contact the lease holder and includes submission of a credit application. The financial institution holding the lease must approve a person before assuming the lease. If the seller or buyer prefers not to communicate directly, the service will act as the go-between.
When a deal is struck, the two parties work with the financial institution that holds the lease to complete the paperwork, or the service will handle all of the paperwork. The seller then pays Swapalease a $95 success fee. Other fees, including a transfer fee, are negotiated between the buyer and seller. Some highly motivated sellers who list on Swapalease offer incentives, such as payment of all fees and a month or two of lease payments. Those listings are highlighted with a dollar sign.
Swapalease is working with financial institutions to walk them through the process of terminating a lease and turning over the remainder of the lease to another party, a perfectly legal practice but a seldom-used one. Meanwhile, Swapalease is expanding its relationships with more financial institutions. "Our ultimate goal is for the customer never to speak with the bank," said Robert Dorger, director of marketing for Swapalease.
The service started in Cincinnati last fall. It has listed 1,200 vehicles during that time and shows about 750 vehicles at any given time. So far, the service has closed 200 deals. Now, Swapalease is expanding throughout Ohio, Kentucky and Indiana and is planned to spread nationwide soon. The service will focus heavily on New York, California, Florida, Texas and Ohio the states that make up half of all leases nationwide.
The speed of business expansion depends on whether the service takes on an investor: The dealership group has funded the venture so far. Mr. Joseph plans slow, steady growth, not a rapid rise and fall. The business, which is expected to turn a profit by year's end, has enormous potential, with 200,000 lease assumptions annually predicted in five years, according to Mr. Joseph.
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