In a monthly-payment driven world, leasing is on the rise to points never seen before, especially for contracts connecting new vehicles and consumers with prime credit. But Swapalease.com executive vice president Scot Hall gave the industry a question to ponder. What if finance companies considered leasing used vehicles — in particular, certified pre-owned models — to subprime consumers, particularly ones who are on the higher-end of the non-prime category?

Used-vehicle leasing still remains a small part of the industry’s book of business. Experian Automotive indicated used-vehicle leasing constituted just 3.19 percent of the entire leasing market in the second quarter, down slightly year-over-year. CNW Research determined there have been 692,218 used leases originated through the first eight months of this year. CNW’s data showed there were 705,180 used-car leases written through August 2013. In eight months of 2012, there were 705,027 used leases.

While those metrics all show slight softening for used-vehicle leasing, Hall again reiterated the potential that’s out there stemming from two key ingredients:

— Continuing rise in off-lease wholesale volume based on contracts written in the past two years.

— A population that has bruised credit but still the ability to make monthly payments.

“It would be a great thing for the entire leasing market overall, and looking more holistically, the entire auto industry overall. There are a lot of people who are going to be considered subprime that are still able to make a monthly payment, and they’ve just had a few hiccups and aren’t bad people at the end of the day,” Hall told SubPrime Auto Finance News during a recent phone interview.

“I think a lot of people lose sight of the fact that leasing is simply an alternative form of financing. You may choose to do a long-term installment loan; you may choose to do a short-term lease. But they’re all just options as a way to pay for that vehicle,” he continued.

“Why there hasn’t been more focus on subprime in the leasing segment, specifically, in the past? Frankly, that seems a little bit unusual that hasn’t been explored further,” Hall went on to say.

Hall also mentioned how the latest metrics from Swapalease.com shows the demand for leasing from subprime consumers.

Swapalease.com reported lease credit approvals during the month of August came in at 85.7 percent, the highest monthly level of 2014 and besting July’s rate of 81.0 pecent.

August marked the second straight month of improving lease credit approvals, and well above the 70-percent mark considered healthy on the Swapalease.com marketplace.

After dipping into a year-to-date average low of 64.5 percent in June, the annual tally is now up to 68.5 percent. The company believes a rise in subprime shoppers weighed down the credit approvals rate in 2014, as more shoppers in this credit profile have applied for a lease.

“We deal with a lot of different leasing companies, some directly, some indirectly. Each of those leasing companies has a little bit different credit process,” Hall said. “In most scenarios, the individual applying for credit is going to know within one or two business days if they’ve been approved to take over a lease. Some leasing companies as a result of not having as much focus on the lease-transfer process may take a little bit longer. It’s going to be a combination of notified directly or notified by mail. Really no differently than if they were looking into a loan or a lease initially at the dealership level.

“When we have a client who contacts us … it’s not uncommon for someone to think they don’t have the credit to do this,” he continued. “We don’t want to simply sign them up for our service and charge them a membership fee, knowing they don’t have a lot of chance for success to take over a lease. Instead, we want to push them over to our partner, ConsumerDirect.com.”

Swapalease.com works to help subprime shoppers elevate their credit profile through a program called Smart Credit and sponsored by ConsumerDirect.com.

“It’s a process and service that can help an individual learn more about what needs to be done to improve their credit and rebuild their credit and point them in the right direction,” Hall said.

Once these shoppers revitalize their credit they can re-enter the Swapalease.com marketplace and reapply for a lease assumption.

“We definitely have had success stories. At the end of the day, it’s a matter of severity,” Hall said. “Prime credit by most definitions is a 700 credit score and higher. Of course the higher the number, the better the credit. Anybody south of 700 in that range is going to be considered subprime.

“Generally speaking when someone has a score of 675, what they need to do to clean up their credit history and their portfolio is a lot less cumbersome than someone who might have a score in the high-500 range,” he continued.

“There’s really not a one-answer-fits-all. Depending on what someone has done in the past or more accurately what someone has not done in the past. It may take them longer to clean up that credit view,” Hall went on to say.

While Hall acknowledged it’s going to take quite an industry shift for leasing associated with subprime consumers or used vehicles to hit level experienced with new vehicles and prime customers, Hall insisted the potential is there to expand on the numbers seen by Experian and CNW.

“You’re going to have different levels of credit enter the market when you have that kind of growth,” Hall said.

Staff Writer Joe Overby contributed to this report.