A lot of you probably have cars that haven’t moved in a long time (thanks COVID) and might find yourself in a situation where you’re unknowingly sitting on car lease equity like I was. Here’s how I found out and how to check for yourself.
I recently paid the last month of my car lease so I planned to turn it in to the dealership and pay a $300 disposition fee like most people do, but due to a change in my commute length and COVID leading to WFH for the past six months I ended up using only half of the miles I was allowed in the lease. I decided to get the car appraised by used car dealers and was surprised to learn I had $4k of equity in the car (appraised at $17.5k while lease end buyout was $13.5k). $4k is almost half the total amount I paid to lease the car over the past 36 months, so this is a huge return.
I accepted an offer from an online used car dealer, scheduled the inspection/pick-up, and two days after they took the car I got my equity check in the mail while the check for the lease end buyout was sent directly to the financing company by the used car dealer… It was that easy.
Here’s a brief rundown on how to do this:
- Call the lease end maturity center for your car and ask what the current lease end buyout is for a third party dealer. Be specific because this amount is different than if you were to buy it out yourself. This amount also changes every month as you make payments, so only call when you’re serious about ending the lease.
- Make sure to ask your financing company if you can sell your lease to a third party dealer. Some don’t allow you to while others won’t let you do it during the last 30-60 days before the lease maturity date, so if you’re thinking of doing this call asap to ask how the exact process works so you can plan ahead.
- When you’re ready to sell get as many appraisals as possible. Carmax, Carvana, Vroom, Shift, and used car dealers are all places to get free appraisals. Online appraisals are generally higher than in-person ones, but check everywhere. These appraisals only last 2-6 days so you need to be ready to turn in your car fairly quickly.
- Accept an offer, set-up the pick-up/drop-off, and make sure the dealership buying the car has the information needed to make the lease end buyout to the financing company
- Cancel your car insurance for the sold car, end your registration/turn in your plates (some states don’t require this), and hopefully walk away with some surprise money
TLDR – My car lease was coming to an end and I was going to pay a $300 disposition to give it back to the dealership, but decided to get it appraised and ended up making $4k by selling it to a used car dealership.
EDIT: Not here to argue whether leasing is good or bad (that’s up to you) or if specific cars should/shouldn’t be leased (depends on the deal you can get), I’m just here to present an often overlooked and potentially lucrative end of lease option to those who do choose to lease.
EDIT 2: Didn’t realize this would get so much attention, but glad to help in any way. This whole scenario happened in California. The process could differ slightly in another state as some have pointed out and I have no idea how this process works in other countries, sorry!
EDIT 3: You don’t have to wait until lease end to do this, but you need to check with your financing company for your situation. If you have a car that’s not near lease end, but you don’t need anymore you can also use this method to potentially get out of the lease without paying early termination fees by giving it back to the dealer. Make sure to ask for the current third-party lease buyout (might also be lease payoff amount, same thing), not lease end buyout as they might give you the wrong figure. Also ask if there are any fees associated with an early lease buyout just in case.
EDIT 4: Getting a few messages about this, please DO NOT lease a car assuming this scenario will play out for you. this is 100% a result of the circumstances we’re living in now that if you can take advantage of, you should. Lease a car assuming you will get nothing back and will have to pay a disposition fee to get rid of it if you don’t keep it because that’s the reality for a lot of people. Remember I did not make a PROFIT on my leased car, I just got a significant portion of the amount I paid for the lease back that I didn’t anticipate getting.