Photo: Kamonwan Wankaew (Shutterstock)
Usually the leasing contract for your vehicle is not a bargain. But then again, these are not normal times. With used car prices more than 34% more than at the same time last year, you can potentially buy your car for less than it currently sells in the market. That way, you could sell your car to dealers and collect the difference. Here’s how it works.
The market value of your leased vehicle
Most leases have a buyout clause that allows you to buy the car at any point during the lease. Your lease contains a residual value that represents the precalculated value of your vehicle when the lease expires. But with vehicle supply issues related to the pandemic, the residual value of cars can currently be much lower than their true market value. For example, a lease could give your used vehicle a residual value of $ 15,000 – but that price probably didn’t take into account the skyrocketing 34% vehicle prices last year, which would add another $ 5,100 in lease equity.
By comparing the market value with the Total cost of early car purchase (Residual value, remaining monthly payments from the lease, sales taxes, and possibly an end-of-lease fee), you can successfully complete your purchase by selling your vehicle on the open market.
How to determine the market value of your vehicle
You can find used car prices for the make, model, and mileage of your car by looking at car rating sources such as. use Kelley Blue Book, Autos.com, TrueCar, and Edmunds. From there, you can compare the real market value of your car to the residual value stated on your lease, as the difference will help you decide whether to go for a purchase (some models are more in demand than others). From there you can ask your dealer for a buyout offer that includes final payments and a possible termination fee. If the bill looks good, you can sell it or pay that equity into a new lease on another car.
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However, car companies are gathering
As Jalopnik points outUsually, you can invite offers from dealers like Carvana or Vroom to buy your lease direct from your car’s finance department and they would write you a check for the value in its equity or that value into a new lease on one of their own vehicles . However, citing supply chain problemsHonda recently joined Nissan and GM in refusing to accept buyouts from unaffiliated dealers, forcing car owners to return cars to the dealerships they bought them from. This, of course, prevents you from getting the highest bid on your car.
This does not mean that you cannot buy the car for the purchase price stated in the contract, but you will need the cash in advance or to finance the purchase with a loan. That way it’s more of a chore and higher risk (since a buyer isn’t in line immediately), but once that transaction is complete you are free to sell the car to whoever you want.
