Cash-for-Clunkers beneficiaries flock to get out from under long-term leases 

From Automoblog:

It’s been one year since the United States government threw some jumper cables onto slumping auto sales with the trade-in program known as Cash for Clunkers…[T]he Cash for Clunkers program gave drivers the opportunity to upgrade from older, less fuel efficient to more efficient, cleaner automobiles through either purchase or a long-term lease. In the midst of poor economics, the well-promoted car sale was a deal too good for many to pass up. However, as time passed, some car agreements made by consumers under the government incentive program has bred some buyers remorse of late.

The post refers specifically to the long-term leases, which account for roughly one in five of the Cash for Clunkers transactions.

It’s disappointing to see that this post doesn’t give any hard numbers, but a trend like this one would be no surprise. It reports that “droves of Cash for Clunkers-inspired vehicle lessees…are actively seeking rescue from their contracts.” The blog explains that long-term leases can be difficult to escape, but former clunker-drivers can try to get someone else to take over their lease at, where they’re…still difficult to escape.

CEO and founder of Sergio Stiberman cautions this may not be an immediate source of refuge for burdened lessees. “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,” Stiberman said. A key factor to shying away drivers from longer term leases is the total amount of payments border on the vehicle’s retail price. Certain to complicate the issue further is the fact the one-year old lease transfer vehicles may not always be as aesthetically or financially attractive as some of the brand new cars being released into showrooms.

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Staff Report

Staff Report

A daily newspaper covering San Francisco, San Mateo County and serving Alameda, Marin and Santa Clara counties.
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