Obligatory mention that you remain liable not just for the payments but for the entire value of the car if it’s crashed/stolen with void insurance or for excess wear and tear at lease return
That doesn’t tell you jack. I’ve seen the background checks for C-level hires. Guys earning 7-8 figures who had been recently sued for failure to pay rent for example
Just my opinion, the risk isn’t as great as everyone fears it to be. You can run the person’s credit yourself (or have them run it and provide you a copy). If they have a high credit score (will need it to pass Audi’s test anyway) and decent assets, they’re not going to burn it all down to screw you on a lease payment. Worst case is you get stuck making the lease payments. But the expected value of that happening x the cost of the lease is pretty insignificant.
Not providing advice to OP. Just saying I think the risk of an Audi lease assumption isn’t that great if you do your due diligence.
Likelihood that they are going to steal the car or illegally operate the car without insurance and total it are pretty low. Someone with great credit and assets isn’t going to ruin their life over $70k. (edit: it would also likely be far less than $70k because AFS would recover the vehicle)
Using your theory, one should never rent a home to anyone, regardless of credit and income, because there is a chance they are going to rip out the walls, saw through the joists and burn the place down. Then you’re out $1M.
Nothing in life is guaranteed. It’s all about managing risk. I’m not advising anyone to lease transfer their vehicle while remaining liable but, if they want to do so, it’s a managed risk.
It’s not. You haven’t actually managed the risk in any way.
To simply say a risk is “low” is not managing it. That’s just operating on assumptions and hunches.
I’m the last person to advocate for excessively insuring against every risk in life. I tell people to skip the “peace of mind” FI products all the time. I don’t worry about a DAS that exceeds 0 or first month. But you definitely insure the big ticket items like cars and houses.
Do you ever let a stranger who’s not on the rental agreement drive your rental car? And let them drive away with it based on a credit check? That’s what an AFS “transfer” is. It’s not even a real transfer. It’s just the addition of one more name to the lease agreement.
I don’t believe they are assumptions and hunches. These are facts:
The original lessee can run someone’s credit, have them show proof of assets, and verify employment. If they don’t feel comfortable with the person, they don’t have to transfer the lease.
AFS will run the person’s credit and assess their risk. This is their business and I believe they are pretty good at assessing risk. They lease/finance over $7 BILLION per year in new cars alone…not counting CPO and used. (double check my math, 200k new cars sold, 20% leased, 80% financed of which 60% financed through captive, $50k avg MSRP)
If the new lessee doesn’t pay, AFS will use their full ability to obtain payments from the new lessee and/or recover the asset. Again, I believe AFS is pretty good at collecting payments and/or recovering assets.
This is an assumption:
Only after AFS has quantified the amount due will they come to the original lessee (unless they’re planning on sending the original lessee a copy of the monthly statements of the new lessee). They can’t hold you responsible if they are not telling you that a payment is due.
Um, no, not the same. See the above facts. Also, I believe it is a transfer with the original lessee as a guarantor. If it was just adding another name to the lease agreement, then both parties should have access to the entire account. I don’t know for certain this is true but I doubt the original lessee has access to the new lessee’s payment history, bank account, etc.
Again, how is this different than renting a house to someone? The car is not in a fixed location but the financial exposure is magnitudes greater with handing over keys to a house than a car. If the original lessee were also liable for the new lessee’s actions (accidents, drunk driving, road rage, etc), then I would view the risk differently. But my understanding is that the original lessee’s guarantee is limited to the lease payments and/or return of the asset.
I mean if you’re doing all those checks, then the risk is much more managed. But typically for lease transfers you’re not doing those background, credit, legal and other checks and etc. And would potential transfer applicants be willing to do so. I mean you can ask for whatever you want, doesn’t mean you’ll get it
I called AFS about this. They said one-pay isn’t eligible for transfers. They did state if it were, you have to be very cautious about who you give it to. A lot of people (young people) put these cars under their parents’ names and beat them to shit. They can return the car with Audi holding both of you responsible even though you didn’t do the damage.
I had a nice convo with the rep and he saw over $10K in charges from over mileage, key missing, dents, and wheels scratched. The original lessee had to pay up because the transferor bailed on it.
Agreed. But if you ask and they don’t agree, then you don’t let them take over the lease. If someone had a good enough lease offer, I’d provide the personal information to take over their lease.
Again, there is more risk to an AFS lease assumption than a BMW lease assumption. I’m simply arguing that the risk isn’t nearly as high as many are making it out to be.
Have I ever let someone take over a lease where I remained liable? Yes, twice.
Would I prefer to let someone take over a lease where I remain liable? No.
Would I let someone take over a lease where I remain liable? Yes, under the right circumstances.
What happens in a scenario new leasee dies and takes another innocent life with him due to an ugly accident ? Does the innocent victims family go after the new leasee who has already died or the other (original) leasee still tied as the guarantor to the lease and his assets ?
Asking for a friend…
