Wednesday, July 3, 2024
If you have a leased car, you might be wondering if it's possible to sell it. According to CarGurus, the answer is yes, and there are several methods you can employ. What's more, if you're looking to move on from a vehicle before its lease term is up, you don't have to break the lease (and pay the fees) to do it. Instead, you can return the leased vehicle to a dealership, sell it privately, or transfer the lease to a third party.
Deciding if it's wise to sell your leased car depends on how much equity you have in the vehicle. Here's how to make the calculation:
Step 1. Determine the car's residual value
The residual value is the amount you can buy the car for when the lease ends if you keep the vehicle for the duration of the lease term. This figure is in your lease contract.
Step 2. Obtain the current lease buyout price
Contact the leaseholder and ask what the buyout price is if you end the lease early. You can calculate a rough estimate of this figure by adding all your remaining lease payments to the car's residual value. The buyout price will typically include what is called a disposition fee plus the remaining lease payments.
Step 3. Check the car's market value
Use a valuation tool or get an online offer for your vehicle to find the car's market value. The tool will require the car's mileage, condition, and options. You can use the tool to find an online offer price from dealerships across the country, as well as what price you'd get if you traded in or sold the car to a dealer.
Step 4. Calculate your equity
Once you have a current market value, subtract the leased car's residual value. If the difference is positive, you have positive equity in the vehicle. If you have positive equity, this figure is the amount you could make by selling your leased car.
Now that you know if it makes sense to sell your leased car, you need to decide how best to do it: via an online sale, at the dealership, or privately.
Selling a leased car online through a third-party platform can take a lot of the guesswork out of the process. Different platforms will have their own ways of handling this process.
Not all companies will follow the same approach, but applying for an instant online offer for your leased car is a sensible first step. For this, you'll need basic details such as your leased car's make, model and mileage. Once you have your quote, use this figure as well as checking your lease contract for buyout fees and the car's residual value to decide if the numbers work in your favor. If they do, the next step is to consult with the online sale provider to see how it handles purchases of leased vehicles.
Selling a leased car to a dealership is the easiest option for many people. It will help them get out of their old vehicle and into a new lease with the least hassle. You can sell your vehicle back to the dealership you leased it from or sell it to another dealership. To give yourself the best chance of getting a strong offer when you trade in your car, find a dealership that sells the brand of vehicle you're trying to sell. For instance, go to a Nissan dealership to sell a Nissan, a Ford dealership to sell a Ford, and so on.
Whatever route you choose, make sure you know the vehicle's current market value by using the steps outlined at the top of this guide. You should also look through your lease contract to find the vehicle's residual value or buyout amount. This value is the leasing company's estimate of what the car will be worth at the end of your lease, accounting for everyday wear and tear (this is also the sale price you would pay to buy the car at the end of the lease).
Check to see if you have positive equity in the car. When using a valuation tool to calculate the price, work with the dealer trade-in value. The dealer will charge you a disposition fee for returning the car, but many dealers will waive it if you lease a new vehicle from them.
You can make money on the deal if you have positive equity. In other words, if your vehicle is worth more than the buyout price, you can pocket that cash or use it as a down payment for your next vehicle. Make sure you total the residual value and disposition fee if you consider this option.
Selling your leased car to a private party may be a better option because you stand to make more from a private used car sale than a dealer trade-in. But with a leased vehicle, this approach comes with a caveat: You will be selling a car you haven't paid off, requiring you to buy the vehicle from the leasing company first. Going this route means you'll need enough cash to cover the residual value and the remaining payments. Check your lease contract for the buyout fees and residual value. You need to know your car's value to ensure the private-sale math works in your favor.
Once you buy the car, the leasing company will send you the title, and you'll be free to sell the vehicle, whether it's to a private party, or via a fully online sale.
You may have to pay a fee to do it, but transferring the lease to another person can be the easiest way to get out of a car lease before it is up. A new owner takes over the lease payments, and you hand over the keys. This is also known as a third-party buyout.
This option is straightforward if you have a family member or friend in the market for a leased car. Even if you don't know anyone who wants to take over a lease, you can use a third-party service to find someone who is looking to pick up a leased vehicle.
Before taking this path, check your contract to ensure your automaker allows lease transfers. You'll also want to check for any liability concerns. Some manufacturers allow transfers but hold the original lessee responsible if the new lessee does not make payments or wrecks the vehicle.
You may ask yourself, "Can I sell my leased car for a profit?" The answer is yes, as long as the buyout price is less than the market value. For instance, suppose the buyout price is $20,000, and the market value is $25,000. That means you'd make a profit of $5,000 if you were to sell your leased vehicle.
Leasing a vehicle doesn't have to chain you to a car—or its payments—for the life of the contract. Of course, you'll need to get some facts straight (the residual value, buyout price, transfer options, and market value of your car) before selling a leased car, but that may be the best option when a lease no longer makes sense for you.
This story was produced by CarGurus and reviewed and distributed by Stacker Media.
