Leasing a car can be a great option because it’s more flexible than buying a vehicle outright. But there are several reasons why you might want to sell a leased car early instead of waiting for a buyout at the end of your term. For instance, your needs may have changed, or the car might not have lived up to your expectations. In today’s economic climate, the residual value of leased vehicles is often low, and you might get more by selling your car to a third party.
Can I Sell a Leased Car?
You can sell your leased vehicle just like you would if you owned the car. In fact, now could be a great time to do so because used cars are more valuable than ever due to manufacturing shortages during the COVID-19 pandemic. The value your dealer assigned to your car when you first leased it is likely to be inaccurate, and you could make hundreds or even thousands of dollars by selling the vehicle.
But while it’s true that most cars have gained in value, this isn’t the case for every make and model. You should always consider your individual circumstances before making a decision. In some cases, keeping your lease and buying or giving back your vehicle at the end of the term could be the best option.
Why Sell Now? The Pros and Cons of Lease Buyout and Selling the Car
When you sign a lease, the idea is that you keep your car for several years, pay the dealership a monthly fee, and then either give back the vehicle or buy it. But these are not always the best choices. If your lease isn’t up for several years but your car no longer suits you, selling it and buying a new one could give you access to a more suitable vehicle. Additionally, you could make thousands of dollars in your sale if the value of your car has gone up significantly.
On the flip side, selling a leased car can be problematic. Many drivers have a clause in their lease that states that only they can buy the vehicle. If this is the case, you’d have to purchase it outright first, then sell it elsewhere. This is often a hassle, and you’ll have to determine whether it’s still worth selling the vehicle.
How Selling a Leased Car Works
If you decide that you’d like to sell your car, you’ll need to first make sure its value is higher than expected by researching the market. Then, you’ll either advertise it privately or sell it to a dealership. While both options can work well, you’ll usually get more money from a private sale.
Step 1: Estimating Residual and Market Value
Most leases last for two, three, or four years. At the start, the dealership estimates what your car will be worth once the term is up, and your payments are based on this expected value. But in recent months, the car industry has undergone many changes, which could have affected the value of your vehicle. If you believe that your car is worth more than the expected amount, selling it off to another driver could be a great way to make some extra cash.
To check whether you’ll be successful, you should find out what the leaseholder would pay you if you wanted to get out of your lease early. Usually, you can do this by adding up your remaining lease payments and the final value of your car, but you should contact your leaseholder for a more accurate figure. Then, you can compare this amount to your car’s current market value. If the latter is higher, it’s likely that selling is a good move.
Step 2: Selling to a Dealership or Private Buyer
Once you’ve determined that you can get a higher amount for your car by selling it off, you can set the process in motion. In the past, it was easy because lenders often allowed third parties to buy the leased car from them. But in today’s volatile market, this might not be the case, and your lender might only allow you, the lessee, to purchase the vehicle.
In such a situation, you will need to consider more carefully whether a sale is the best way forward. Sometimes, you can still make money by buying the car from the lessor and then selling it off to someone else. When you’re ready to sell, you can contact local dealerships and ask for a quote or advertise the vehicle on your own. While it’s more hassle to sell the car by yourself, it’s likely that you will make more money that way. However, if you need to replace the vehicle quickly, trading the car in at a dealership is always a great option.
Although most leases have a fixed term, you can sell a leased car to a third party before your term is up. This could be a good alternative to a lease buyout, especially if the dealership’s estimate of your car’s residual value is too low. Follow us on Facebook or Twitter to stay up to date on the latest automotive trends and news.