Are you wondering whether you can sell a leased car? Yes, you can. And there are a couple of ways to go about it. Due to the increasing demand for used vehicles, people with a car lease can sell their cars, especially those nearing the end of the lease term. They can even end up making a profit from the sale.
Anyone who’s ever leased a vehicle will be familiar with the procedure for returning it at the end of the lease term. But to sell a leased car is a different thing entirely. Selling a leased car can be more complicated than selling a vehicle you own outright.
What happens if you decide to sell your leased car before the period of the lease is up? Are there any limitations on who can buy it or specific requirements you need to follow?
Car leases are often structured to allow the lessee to return the vehicle at the end of the lease period or buy the vehicle in a buyout. Strangely, few people talk about selling the leased car to a third party or dealership. If you have a leased car and don’t need it anymore, selling it could make you money.
This guide will teach you the processes, limitations, and requirements if you want to sell your leased car.
Overview: What Is Equity in a Leased Car?
Equity in a leased car refers to the difference between the value of the car at the end of the lease and the amount that you still owe on the lease. Therefore, if the car’s value exceeds the amount you owe, you have equity in the car. If the car’s value is less than the amount you owe, you have negative equity, also known as being “upside down” on the lease.
For example, let’s say you lease a car for $500 per month for three years and make all of your payments on time. You will have paid $18,000 over the three years. At the end of the lease, the vehicle is worth $21,000, but you still owe $3,000 on the lease. In this case, you have $18,000 positive equity in the car.
Equity in a leased car can be vital if you decide to buy the car or trade it in for a new one at the end of the lease. If you have positive equity, you can use it as a down payment on a new car or reduce the amount you need to finance. If you have negative equity, you may need to pay off the difference to get out of the lease or trade in the car.
Equity in a Leased Car: Understanding Its Importance
In addition, auto finance companies are serious about determining a leased car’s residual value. The residual value is the vehicle’s estimated value at the end of the lease, and it is used to determine the monthly lease payments. In most cases, the residual value is based on various factors, including the car’s make and model, the lease’s length, and the estimated mileage.
However, there are some unique situations where a leased car may be worth more than the residual value that the auto finance company originally established. In this case, you may have equity in the car and make a great deal selling it off to Auto Geeks at the actual value.
There are a few reasons why a leased car might be worth more than the residual value. One reason could be that the vehicle has appreciated due to high demand or a limited supply. For example, if a car is a classic or a collectible, it may be worth more at the end of the lease than the residual value that was established at the beginning of the lease.
Another reason could be that the car was well-maintained and in good condition. If you took good care of the car and kept it in good condition, it may be worth more at the end of the lease than the residual value.
While it is possible for a leased car to be worth more than the residual value, it is very uncommon. Quite the contrary, it is more common for a leased car to be worth less than the residual value at the end of the lease, especially if the vehicle has high mileage or has not been well-maintained.
Get an Appraisal of Your Leased Vehicle
Getting an appraisal of your car is a good idea, especially when you want to sell a leased car. This will help you determine the current value of the vehicle. An appraisal estimates the car’s worth based on its condition, age, make and model, and other factors.
It is essential to remember that a car’s value can vary depending on the method used to appraise it. Do you need help getting the right appraisal for your car? Auto Geeks can help you inspect and get the best appraisal valuation for your vehicle. You can sell your leased car at the best market price you won’t find anywhere else.
However, if the appraisal of your leased car is less than the residual value, it may be challenging to sell the car because you may owe more on the lease than the car is worth. This is known as being “upside down” on the lease or having negative equity.
The Impact of Appraisal on Selling a Leased Car
When you are upside down on a lease, it means that you owe more on the lease than the car is worth. For example, if the residual value of your leased car is $20,000 and the appraisal shows that the car is only worth $18,000, then you are upside down on the lease by $2,000. In this case, you can not sell your leased vehicle.
On the other hand, you can sell the leased vehicle if the appraisal is more than the car’s residual value because you have equity in the vehicle. Additionally, the number of months remaining on the lease can be essential.
In general, the closer you are to the end of the lease term, the higher your chances of selling the vehicle may be. This is because potential buyers may be more interested in a car closer to the end of the lease, as they will have less time to make payments.
If less than two months remain on your car lease, you have a higher chance of selling the car.
Overall, if the difference between the appraised value of the car and the residual value is enough to cover the remaining payments on the lease, then you have a good chance of selling the leased car.
Lease Buyouts Aren’t Available to Everyone
A lease buyout is when you purchase the vehicle you have been leasing. This is a great option if you want to own it outright or if you need to sell the car. However, not everyone is eligible for a lease buyout.
A few factors can affect whether a lease buyout is available to you.
One factor is the terms of the lease. It’s customary for a lease agreement to include an option to purchase the vehicle at the end of the lease for its residual value. Unfortunately, not all lease agreements offer this option. Only certain auto finance companies offer third-party off-lease buyouts.
Some leases may have partial or complete restrictions on lease buyouts, which may require you to meet certain criteria to be eligible for a buyout or prohibit you from transferring the lease to a third party. Other leases may have no restrictions on third-party off-lease buyouts, allowing you to sell or transfer the lease to another party. It is essential to carefully review the terms of your lease to understand your rights and responsibilities concerning the lease buyout option. Suppose you are unsure about your eligibility for a lease buyout or have questions about the terms of your lease. In that case, consulting with the leasing company or a legal professional is recommended for guidance.
Overall, lease buyouts are not always available to everyone, but they can be a good option for some people who want to get out of a lease early. Reviewing your lease’s terms is essential to determine whether you are eligible for a lease buyout.
In conclusion, the key to successfully selling a leased car is to follow the steps outlined in this article: determine whether you have a positive equity or not, check with your leasing company to see if you are eligible for buyouts or if there are any restrictions, get an appraisal to determine the value of the car, and advertise to your potential buyers. By following these guidelines, you can navigate the process smoothly and successfully sell your leased car.
Fortunately, Auto Geeks can help you accurately appraise your vehicle and buy your leased car at the best price, saving you the hassles of looking for potential buyers. Auto Geeks will provide an instant offer from cars to trucks and vans within three business hours! Get an offer now.