Selling A Leased Car
Can you sell a leased car? The answer is yes! And there’s never been a better time to do it. Due to a high demand for used cars and a shortage in used car inventory, people with a car lease that’s nearing the end of the lease term can sell their car and potentially end up making a profit.
At Credit Union of Southern California (CU SoCal), we make getting an auto loan easier.
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Thinking about selling your leased car but don't know how to get started? Read on to learn how to sell a leased car.
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Why You Should Consider Selling Your Leased Car
Car leases are generally created to allow the car lessee to turn the car in at the end of the lease term or purchase the car in a buyout.
However, no one talks much about the option of selling a leased car back to dealership or selling a car under lease to a third party.
If you are leasing a car and no longer need it due to a change in your work or driving needs, or you simply don’t want to keep it, selling a leased car could earn you some money.
This is especially true if you have taken good care of it, which helps maintain its residual value.
Here are the three steps to determining if selling a leased car is worth it:
Step 1: Understanding Your Car's Equity
First, determine the car's equity, in other words, how much it’s worth.
Know The Residual Value In Your Contract: Look at your lease contract/agreement and find the “Residual Value.” This is the amount the leasing company anticipated the car would be worth at the end of the lease term. The leasing company often uses the residual value as the buyout price or as a means to calculate the buyout price.
Research Today's Buyout Price: Contact the leasing company with whom you have your contract and ask for the buyout price. The buyout is the amount the leasing company would charge you (including fees) to buy the car from them. If the residual value is higher than the buyout price, then you would benefit from buying the car. Learn More
Research The Current Market Value: Go online to a website that provides car value estimates, such as Kelley Blue Book, National Automobile Dealers Association, Consumer Reports, to name a few.
You’ll need to enter details about the car, including year, make, model, condition, VIN number, etc. If the leasing company underestimated the car’s residual value and the market value is higher than the residual, you could make money selling the car to another dealer or a company like CarMax or Carvana.
Do The Math: Compare the residual value to the current market value. If the current market value is greater than the residual value, it could be worth it to buy the car, especially if you can negotiate a good buyout price that lets you come out ahead.
For example, if the residual value is $14,000 and the current market value is $18,000, and you can do a buyout for $16,000, then you are getting the car for below its market value. You could turn around and sell it for $18,000 and make $2,000. The numbers are important, so before doing a buyout, make sure you check several current resources to get the value of your car.
Step 2: Consider Buying The Car Yourself
Although you may make a profit when selling a leased car to a third party or selling leased car back to dealership, there are other opportunities to benefit from if you buy your leased car.
For one thing, you're already familiar with it, and if you’ve maintained it well, it has low miles, and it’s been reliable, consider keeping the car.
If you will still need a car, consider what you’ll pay for a new leased car or a brand new car. In this case, you’d likely save money by doing a buyout and continuing to drive it for years to come.
Step 3: How To Sell A Leased Car
Lessees looking to sell their leased car have several options:
Selling To A Private Party: This means selling the leased car to a friend, relative, or a stranger who is interested in the car, and it can be handled a couple of ways.
You may purchase the car from the leasing company and then sell it to a private party. Or, you can do a “third-party buyout,” which means selling the car without buying it from the leasing company.
Find out from the leasing company or manufacturer if this is allowed, and if it is, they will often facilitate this transaction. Once you receive payment from the third-party and pay-off any final fees you owe on the car, the ownership can be transferred to the buyer.
This method could require more work on your part, but it can also save you from paying sales tax.
Selling To Local Dealer/Selling Your Leased Car Back To The Dealership:
Due to a shortage of good used car inventory, many car dealers are looking to buy and may be willing to pay a good price.
To sell to a local dealer, you would do a lease buyout and turn around and sell the car.
You could also choose to sell your leased car back to the dealership that did your lease and get money or trade-in value towards the purchase of a new car.
Selling To An Online Service: Companies including CarMax, Autotrader, and others, purchase cars or help facilitate sales. Be sure to check the value of the car and compare it to the lease buyout value before making a commitment to sell.
Other Options For Getting Rid of a Lease
If selling or buying the car isn't a viable option, there are other ways to end a car lease, including:
Lease Transfer: Know someone who loves your car? Some leasing companies will allow you to transfer the lease and lease payments to another person.
Lease Trade: At the end of your lease term, you may choose to trade-in the car for a new leased car. If you decide the time is right to purchase a new car, ask the dealership about special incentives. They may be willing to waive certain lease turn-in fees if you purchase a new car.
Returning The Car: At the end of the lease term, simply return the car per the lease contract. Before returning your leased car, read the lease agreement to see if you’ve kept to the stated requirements for miles driven, wear and tear, and any other stipulations. Not adhering to the lease terms could cost you at the end of the lease term. If the car has many miles over what your agreement specifies, and it has significant wear and tear, the leasing company will charge you for these and the penalties could add up to the thousands of dollars. Be prepared.
Is Selling Your Lease The Right Move?
As you can see, when it comes to selling a leased car there are many options available.
Selling a leased vehicle can be profitable when market demand is high and the car has low wear-and-tear, low miles, and a high market value.
The decision will come down to the value of the car and the amount of effort you want to put into the transaction.
CU SoCal Auto Loans
If purchasing a new or used car is more your style, CU SoCal can help with car loan financing! We offer:
Up to 120% financing for new and used vehicles.
Rates as low as 2.89%APR.
Extended terms up to 84 months for the lowest possible monthly payment.
A personal auto-buying concierge service.
Low-cost loan protection add-ons.
No application or funding fees.
Why Savvy Consumers Choose CU SoCal
For over 60 years CU SoCal has been providing financial services, including car loans, personal loans, mortgages, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation consultation with one of our auto loan experts.
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