How to Sell Your Lease Car
More than one out of every four new vehicles is leased rather than purchased. Leasing is a good option for consumers who want more flexibility than buying can offer. It is ideal for consumers who want lower monthly payments and the opportunity to switch vehicles every few years.
But what happens if you no longer want to lease the car after signing the lease agreement? For example, you want to get out of the agreement due to a change in your financial situation or simply because you want to get a new car. In cases like these, it’s important to explore all of your options, including selling your vehicle. Here’s everything you need to know about how to sell your lease car:
What Are Your Options for Selling A Leased Car?
If you are interested in selling your leased car, you have three different options, which are:
- Selling To A Dealership
- Selling To A Private Party
- Selling To An Online Automotive Company
Selling To A Dealership
Your first option is selling your leased car to a dealership. You can either sell it back to the dealership you leased it from or sell it to a completely different dealership.
Selling to a dealership is much easier than selling to a private party because you don’t need to find an interested seller. All you need to do is request quotes from dealerships in your area. The best way to do this is to contact local dealerships that sell the type of vehicle you are leasing. For example, if you are leasing a Toyota Corolla, request quotes from Toyota dealerships in your area.
Plus, the dealership will typically handle the paperwork involved in the sale, whereas if you sell it to a private party, you and the buyer will have to take on this responsibility.
If you plan on selling your leased car, now is the best time to sell it to a dealership. Why? Used car inventory is thin because of the COVID-19 pandemic. As a result, many used car dealers are struggling to find good used cars that they can resell to their customers. Because so many dealers are scrambling to find used cars, they may be willing to pay a premium price for your vehicle if it’s in good condition.
Selling To A Private Party
If you don’t want to sell to a dealership, you have the option of selling your car to a private party instead. This option won’t require much effort if you already know someone who is interested in purchasing your leased vehicle. But if not, you may need to invest a little time and energy in listing your car online and finding an interested buyer.
Remember, if you are selling your vehicle to a private party, you and the buyer will need to handle the paperwork. This can be a headache, especially if this is your first time selling a vehicle.
However, there is one benefit to selling to a private party rather than a dealership. A private party is not buying your vehicle with the intent to resell it for a profit, whereas a dealership is. Because of this, you will typically be able to make more off of a private sale than you would if you sold it to a dealership.
Selling To An Online Automotive Company
The third and final option is selling to an online automotive company, which is similar to selling to a dealership. Just like brick-and-mortar dealerships, online automotive companies like CarVana and Shift are facing a used car inventory shortage, so they may be willing to pay more than you expect for a used vehicle in good condition.
Should You Sell Your Leased Car?
Some people may benefit from selling their leased cars, whereas others may not. How can you determine if it’s a good decision for you? Follow these steps to find out if you will be able to profit off of selling your leased car:
- Look up the residual value in your lease agreement. The residual value is an estimation of how much your car will be worth at the end of your lease. This is also the amount you can pay to purchase your vehicle once your lease is over. Because used car prices have skyrocketed so much over the last year, the residual value in your lease agreement might be very low, which means you may be able to make a profit off of selling your leased car.
- Calculate the buyout price. The next step is figuring out your buyout price, which is how much you will need to pay right now in order to end your lease early. To get this number, you can call the company that granted the lease or estimate it on your own. If you choose the latter option, simply add up all of your remaining lease payments and add this sum to the residual value. So if the residual value of your vehicle is $10,000 and you still have $3,000 remaining in lease payments, the buyout price would be around $13,000.
- Figure out the current market value of your car. Now that you know the buyout price, you need to find out how much your car is currently worth to determine if you can make a profit off of selling it. Using a free online valuation tool is the easiest way to get the current market value of your car. You will just need to enter some basic information such as the year, make, and model, to get an estimate.
- Determine your profit. Then, subtract the buyout price from the current market value of your car. For example, if the buyout price is $13,000 and the current market value of your car is $16,000, this means you could profit around $3,000 by selling your leased car.
Following these steps will help you determine if selling your leased car will benefit you financially. If your car is worth more than the buyout price, you may want to consider selling it so you can pocket the profits.
What About Third-Party Buyout Restrictions?
Every lease is unique, which is why it’s important to read your agreement carefully. The terms of a lease agreement can vary from lender-to-lender, especially when it comes to third-party buyouts.
A third party buyout is a transaction that involves a dealership or private party buying your leased car from you for the agreed upon buyout price. Some lenders prohibit all third-party buyouts, whereas others allow them under the condition that the third party pays a much higher buyout price as part of the deal.
For example, your buyout price might be $10,000, whereas the third party buyout price might be $15,000. This means you would only need to pay $10,000 to buy your leased car, whereas a third party would have to pay $15,000 to purchase it from you.
If you want to sell your leased car, take a look at your agreement to see if it includes buyout restrictions. If your lender prohibits third party buyouts or charges third parties a much higher buyout price, you may still be able to sell your leased vehicle and pocket the profits, but it will take a little more effort. Here’s what to do:
- Pay the buyout price on your lease on your own. Because you are not a third party, you have the option to buy your leased vehicle for the agreed upon buyout price. You will not be charged the third party buyout price.
- Complete the appropriate paperwork. Make sure your name is on the title and registration now that you are the sole owner of the vehicle.
- Now that you own the vehicle, you can sell it. Because used cars are so in demand right now, you may be able to sell it to a private party or dealership for a higher price than what you paid for it.
That’s all it takes to sell your leased car if your lease contains a third-party buyout restriction. Anything you make from this sale will be yours to keep.