“Cancel Anytime” sub-prime lease

“Buy here, pay here” lender DriveTime Automotive Group has launched a radical new leasing product, which the company says is designed to make it easier and cheaper for individuals with poor credit ratings to own a car, plus the flexibility to end contracts early if required.

Called “Cancel Anytime,” the leasing program offers 30-month contracts with a typical down payment of less than $1,000 and the option of canceling at any time without a penalty.

Arizona-based DriveTime, which bills itself the largest US used car dealer helping people with credit issues, says the Cancel Anytime deal allows customers to return their leased vehicle to the dealership and end the contract when they want, without negatively affecting their credit score or incurring financial penalties.

With the Cancel Anytime lease, consumers can drive up to 24,000 miles per year and are only required to maintain the state’s minimum liability coverage, so cutting insurance costs. Lessees also receive a complimentary maintenance package which includes oil changes and a limited warranty lasting the life of the lease covering critical engine components, as well as the drivetrain and air conditioning.

Customers will earn credits through the Lease Rewards program, giving them the option to exchange the car for another vehicle, or purchase the vehicle at the end of the lease.

DriveTime says it has been testing the program over the past 18 months to find out exactly what consumer’s pain points are when it comes to vehicle ownership.
“We understand the financial challenges that face American consumers today, and are dedicated to providing transportation to anyone, no matter your credit score,” said Chris Braddock, VP of DriveTime. “By giving greater flexibility with our lease program, we are able to better serve our customers, giving them access to a vehicle on their own terms, so that they can experience many of the same benefits of vehicle ownership, without the drawbacks.”

The company says the new offering is designed to help the estimated one third of consumers with non-prime or lower credit ratings, who it says usually do not qualify for new car lease promotions, and who cannot afford the average used car down payment of over $2,000. DriveTime reports a 25% incremental growth to its business since the introduction of the program.

In late 2014, the Consumer Financial Protection Bureau (CFPB) ordered DriveTime to pay an $8 million civil penalty over compliance issues. The agency alleged the company had made “harassing debt collection calls” and provided inaccurate information about borrowers to credit reporting agencies. DriveTime was also required to take corrective actions, including free credit reports for the consumers affected.