If it’s getting close to the time for turning in your leased vehicle, then it’s time to consider selling it rather than turning it in. Why? The answer is simple: If you turn it in, you could be walking away from potentially thousands of dollars you deserve to keep! It depends, of course, on a number of specific factors, but we want you to know that sometimes it makes sense to sell your leased car instead of turning it in. This article will explain what you need to consider in order to make this decision.
Equity Can Help You Decide to Sell Your Leased Car
Most people don’t think about having equity in a leased car because you don’t feel like you really own it. But you might have real equity in your leased car, and if you do than that equity is yours. So how do you find out if you have leased-car equity? It’s all about the market value of your vehicle as you approach the end of your lease.
As you already know, at the end of your lease you have the option to purchase the vehicle or just turn it in. How does the leasing company decide the purchase price? Back when you first leased the car, the leasing company made a prediction of what the vehicle would be worth at the end of the lease term, and that prediction forms the basis for the whole lease.
The leasing companies are very good at predicting the residual value of the vehicles they lease, but there is still an element of the calculation they cannot predict – market fluctuations. Your leased car might be worth more than what the lease company predicted for its residual value. That’s the equity you might have in your leased car, and it’s yours to do with as you please. You could use it as a down payment on your next vehicle to lower your monthly payment. You could also decide to sell the vehicle to pocket that extra equity cash.
The flip-side of this calculation, of course, is that the leasing company might also have been wrong about the car’s residual value in the other direction, meaning your car is worth less than what they predicted. In this case, you would want to turn it in because you won’t incur any extra costs.
You can always contact your lease company in order to get a lease payoff figure, and that’s what you would compare to the market value of your vehicle to see if you have leased-car equity. The details of your lease agreement are important to know because in some cases you might not be allowed to sell your leased vehicle in this way. If you’re more than a year out from your lease turn-in day, check your lease contract to find the “residual value” and use that figure for your comparison.
Note that your decision to sell your leased car is driven by having an accurate understanding of your leased car’s current market value. Two popular places online where you can estimate the market value of your leased car include Edmunds True Market Value and Kelley Blue Book Value (KBB). If you’re in California, KBB is the more common choice. You just plug in some information about your car, including an honest assessment of its condition, and you’ll instantly know what your car is worth.
Lease Charges Can Help You Decide to Sell Your Leased Car
The comparison between your leased vehicle’s predicted residual value (found in your lease contract) and its market value gives you an initial picture of whether or not you have leased-car equity. But there are other factors you need to consider as you try to decide whether to sell your leased car or turn it in. When you turn your car in at the end of a lease, the leasing company is going to check the mileage. If you’ve gone over on your allowable miles, you’ll be charged for each additional mile over the limit, and those extra miles can add up quickly to hundreds or even thousands of dollars. You could avoid paying the mileage fees by selling your leased vehicle, but only if you have enough leased-car equity for it to make financial sense.
There could also be a disposition fee or other charges in your lease contract that you would have to pay if you turn the car back in, so it’s worth spending some time going through your lease contract to identify all of those and include them in your calculations.
Finally, the leasing company will also check your leased vehicle for damage or excessive wear and charge you for that as well – more money you’d have to pay if you turn the car back in. Add that in to your calculations and compare it to the current market value to help you decide whether or not to sell your lease car instead of turning it in.
One Sure Sign You Might Want to Sell Your Leased Car
In some cases, a dealership might proactively reach out to you and offer to buy your leased vehicle before the lease term is up. These “pull-ahead” offers are typically trying to get you into a new lease deal, and the dealership may offer various incentives like waiving your last few payments and/or any of the fees usually charged at the end of the lease. But here’s the thing you need to know: The only reason a dealership is making an offer like this is because they are confident they can then re-sell the leased car they buy from you for a tidy profit. And that means you could pull that profit out for yourself. Check the market value of your leased vehicle and compare it to the buyout figure you get from your lease company. If the market value is significantly more than the lease buyout figure and you’re confident you can sell the vehicle on your own, then go for it!
How You Sell Your Leased Car Matters
Let’s say you’ve looked at the residual value of your leased car, compared it to the market value and have decided it does make sense to sell your leased car. Now you still have to figure out how to go about selling it, which can make a big difference in terms of how much you can get for it. Selling it to a dealership is the faster, easier way to get the job done, but you tend to get significantly more money if you sell it privately on your own, although there’s a lot more leg-work involved.
A third option is selling it to a car-buying service like Driveo, where it’s as easy to cruise in and cash out as it is at a dealership, but for more than you would get at a dealership. If you have positive equity in your leased vehicle, we’ll handle all the paperwork for you and you’ll walk away with a check for your leased-car equity! Ready to find out what Driveo will give you for your leased car? Get a fast online quote today that’s good for 30 days!