Consumer Web Site Aims to Sidestep Finance Companies at Lease-End

An investment advisor disappointed by his lease-end negotiation process with Porsche Financial Services has created a web site to help consumers in similar situations.

Michael Corcelli launched GetYourCarBack.com to offer auction and pricing information to consumers whose leases are expiring.

Here’s how it works: You return your car at lease-end. For $100, you can use the site to track down the location and time your car will be auctioned. For another $1,000, you can hire an auction rep to buy the car back for you.

The rationale is that consumers will pay less for their vehicles at auction than they would if they paid the pre-set residual value.

Tags: end-of-term, getyourcarback.com, lease

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Comment by steven pittler on January 21, 2010 at 12:09pm: Can you please email me this story?

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Comment by Jeff Cook on January 21, 2010 at 12:15pm: First blush, it seems like throwing a lot of good money after bad. Afterall, how many lessees REALLY want their car past lease end? And even if you did, I cannot imagine spending $100 to find out where that exact car was going to auction. Hell, a good number of them will be sold mid-stream and never reach the auction. I wonder how he's going to reconcile that?

Am I missing something here?

Comment by Marcie Belles on January 21, 2010 at 12:32pm: Thanks for the comment, Jeff. (I had a hunch you might offer some feedback on this one.) It seems like the service is geared toward lessees with higher-end vehicles. Among the examples listed on the site are a $27,000 SUV that sold at auction for $18,000 and a $52,500 Mercedes Benz S 500 that sold at auction for $22,000 (it was repossessed, not lease-end).

I hear you on the fact that there would be a good number of vehicles that wouldn't make it to auction. But for those that do, I don't think the average consumer has any idea how to go about figuring out where to find them.

Comment by William Fowler on January 21, 2010 at 1:55pm: Marcie this is very interesting. Note those that purchased C4C have much greater problems with making payments than those that purchased outside C4C. Each time the government steps into credit or financing and upset long standing lending rules (risk base modeling) they screw up the pie.
On Sub-Prime Auto Finance News
CNW: CARS Buyers' Remorse Drives up Late Payments, More
By Jennifer Reed, Auto Group Editor
January 21, 2010

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BANDON, Ore. — Apparently, CNW Research discovered in October that there was already a "fair amount" of buyers' remorse related to Cash for Clunkers purchases. Since that period, the remorse level has continued to climb.

More specifically, back in October, more than 17 percent of buyers indicated they likely should not have purchased a new vehicle under CARS. This compares to about 7 percent of buyers who purchased vehicles during the same time frame but did not take advantage of Cash for Clunkers.

"A follow-up survey conducted earlier this month shows the share of C4C users suffering buyers' remorse climbed to 19.4 percent while those non-C4C buyers slipped to 6.1 percent," Art Spinella, of CNW, explained.

And apparently, buyers' remorse is also playing a role in late payments, according to Spinella.

"Even 5 percent of the highest credit category users of C4C are late with at least one and as many as three payments," he pointed out. "Among mid-range or near prime users of C4C, about 6.5 percent have delayed at least one payment. And among subprime users of C4C, a staggering 18-plus percent have been late making at least one payment. These figures compare to 2.4 percent, 4.1 percent and 10.3 percent, respectively, for those who didn't use Cash for Clunkers."

Spinella went on to explain that many of the CARS buyers didn't think past the new car smell.

"Most, however, anticipated the economy improving substantially between last July and today and felt that improvement would give them the financial boost necessary to at least offset some of the additional monthly payment. That's one of the reasons the remorse figure climbed in January: The economic turnaround didn't come," he said.

Another mid-January analysis of the CARS data showed that those who used the program tend to have higher repossession rates than those who purchased vehicles outside the program.

"Broken down by credit tier, the most dramatic difference can be seen in the subprime category. In terms of repossessions, those who used C4C have hit a 4.8 percent repo rate compared to 2.24 percent of buyers of a similar ‘basket' of vehicles who did not use C4C," Spinella highlighted.

However, he said the data for prime and near prime repossessions is not as clear cut.

"While C4C users have higher repo rates, the numbers are sufficiently close this soon after the program ended that no real difference can be solidly pointed to," Spinella noted.

Continuing on, Spinella indicated that the fear by many in the industry that CARS sales were being brought forward from what would have been later months, or the first and second quarter of this year, has been unfounded.

"December sales at 1 million units were 14 percent ahead of the previous year and well beyond the anticipated 800,000 units. If C4C had in fact generated significant pull forward, the December figure would have been significantly lower. Instead, the boost in August sales was followed by a decline of similar proportions in September and return to trend line in November and December," he suggested.

Comment by Chuck Carboni on January 21, 2010 at 3:33pm: In response to Jeff's question "how many lessees REALLY want their car past lease end?", it was my experience during my remarketing days with MBCC and CF that there's a significant number of people who are interested in retaining their vehicle. However, as the gap between market value and residual value grew so did the challenge of mitigating our risk by keeping these cars from coming back.

Maybe his model allows consumers to have the vehicles purchased on their behalf through upstream channels as well as through the traditional auction lane. But he is going to have auction reps purchase the vehicles on behalf of the consumer? I would imagine that will put the auctions at odds with the consignors...that could get messy!

Comment by Chuck Carboni on January 21, 2010 at 3:41pm: Just checked the website - it appears that they're able to locate your vehicle at physical or online auctions. Also, vehicles aren't purchased by auction reps: "through our registered network of dealers we will represent your interest at the auction"

Comment by Marcie Belles on January 21, 2010 at 11:23pm: Thanks for the clarification, Chuck. Sorry for the error.

Comment by David Ruggles on January 21, 2010 at 11:58pm: In my experience there is a huge difference in the number of lessees who actually buy their off lease vehicles when comparing dealers and independent lease companies/facilitators.

The more sophisticated lessees are fully aware that if they DO try to buy out their vehicle the lessor will probably try to charge them a lot more than market value. This leaves the door open for a site like this one. If the guy can buy a list of lessees and pitch them on his service during their lease he might generate some interest.

Comment by Jeff Cook on January 22, 2010 at 7:33am: Chuck, when you were with MBCC and faced with a large gap between the residual and current market value, did you have the flexibility negotiate lower buy outs with lessees at lease end?

I suspect not. However, a site like GetYourCarBack may very well make that a reality soon.

Comment by Tarry Shebesta on January 22, 2010 at 9:26am: We actually do get lease end customers asking how they can either negotiate with the lessor or if we can help them buy it. Most of the time we simply make the current payoff and sell it to a buyer the lessee has found to avoid double tax. I don't see this as a volume service and I agree with Jeff about the upstream potential of the vehicle being sold prior to auction.