What do you do when customers arrive at the showroom and want out of a vehicle lease?

Maybe they lost their job and won’t be able to afford the monthly payments. Maybe their current vehicle doesn’t comfortably accommodate their new long-legged love interest while another model currently in inventory might. Maybe they simply no longer need the vehicle.

Or perhaps a worst-case scenario, they don't like the car at all that has your dealership's name and logo on the back.

Whatever the scenario, for customers unfamiliar with how leasing unfolds, they might not understand early termination comes at a price, namely fees and the requirement that customers fork over your remaining monthly payments immediately.

Companies such as Swapalease.com and LeaseTrader.com facilitate what’s known as a lease assumption, whereby one party can take on another’s lease midway through. Listing and transfer fees do apply.

It can be a win for both sides, giving the lease seller a way out without penalty, and the lease buyer a short-term lease (something that can fit a variety of life situations but it is not generally available through standard avenues) — often with no down payment.

There are caveats. Not all finance companies allow lease transfers, and some might keep the original lessee’s name on the contract, meaning that person is liable if the new lessee balks on payments. Customers are advised to study the terms carefully.

Auto Remarketing recently spoke to Scot Hall, executive vice president for operations at Swapalease, to learn more about lease transfers and to get his take on what has been widely reported as a looming excess of off-lease vehicle supply.

Auto Remarketing: There are many reasons why someone might want to exit a lease. What, in your opinion, is the most common?

Hall: We see people come to us that fit into one of two large buckets: lifestyle change or financial issue. It could be as simple as a young couple with a two-seater convertible, and they find out they have a baby on the way. Maybe someone loses a job or is downsized. Maybe they’ve got themselves a little bit overextended.  … I think it would really depend on the situation.

AR: What could be a pitfall for someone assuming a lease? What do people need to understand?

Hall: You could have a tremendous amount of negative equity, making it not a viable economic option. It typically does require pretty good credit, or above-average credit, which not everyone has, unfortunately. Outside of that, people would want to protect themselves in terms of the actual vehicle that they’re taking over. You would not want to take over a vehicle (I’m going to exaggerate a lot) that’s missing a door. Whatever damage or over-mileage become the responsibility of the person taking over that lease. At Swapalease, we have different services available to help protect people themselves from that. And overall, we don’t see a lot of problems; most of our cars are a year or two old.

AR: What type of cars and trucks would make-up the short-term lease universe?

Hall: German and Japanese luxury cars, because they are leased more. These aren’t exact numbers, but of every 10 Chevys sold, two are leased. BMW, that number is six or seven.

AR: How many lease transfers has Swapalease facilitated?

Hall: Swapalease has done tens of thousands of lease transfers — about 1,000 transfers on a monthly basis.

AR: We’re already seeing a lot of off-lease supply, with increases on the horizon. Is this cause for alarm?

Hall: I think it’s not the issue some people are making it out to be. We’re still playing some catchup in terms of used-car demand, what’s left over from the recession and restocking lots, even going all the way back to Cash for Clunkers. That really kind of changed the dynamics of programs. Moving forward, it’s something that both captive finance companies as well as your banks that do leasing will need to address. Legally, the best way to address that is by offering offer more and more attractive finance options.

AR: Is there a tipping point?

Hall: What amount of leasing is sustainable? It’s really hard to say in terms in percentages. Right now, we’re looking at about 30 percent lease penetration overall. … I think there’s quite a bit more room now. We are becoming a society of people who don’t necessarily need to own things. … You’re paying for what you use. Also, you’re staying up on top of the latest technology. Think of car leasing as phone buying: new, new, new every so often. More and more people are looking at the idea of the idea of leasing, and there will be some challenges associated with that.