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When it comes to leasing a car, the word "equity" might not be the first thing that comes to mind. However, understanding the equity you can build in a leased car can be a game-changer, especially when it comes time to decide whether to buy out your lease.
At Lease End, we're all about helping you make the most of your leasing experience, including leveraging equity to your advantage.
Equity in a leased car refers to the difference between the car's current market value and the lease buyout amount. As you make lease payments, you gradually build equity in the vehicle.
This equity can be used to your advantage when it's time to buy out your lease.
Building equity in a leased car can provide you with financial flexibility at the end of your lease term. For example, if your car has higher equity than the buyout amount, you can choose to buy the car and potentially sell it for a profit.
On the other hand, if the car's value is lower than the buyout amount, you may decide to return the car at the end of the lease term. Monitoring your lease equity can help you make informed decisions about whether to buy out your lease or explore other options.
Learn More: 4 Things to Know About Equity and Your Leased Car
Of course, regardless of equity implications, drivers may opt for a lease buyout because they’ve fallen in love with their leased vehicle or simply want to enjoy the convenience of ending their lease without needing to take a trip to the dealership to shop for a new one.
When it comes to leasing a car, top cars to lease are often those that combine reliability, affordability, and a high residual value.
Models like the Honda CR-V and Toyota RAV4 consistently rank among the best leases due to their strong resale value and low depreciation rates. These vehicles offer a balance of practicality, comfort, and fuel efficiency, making them popular choices for lessees looking for a dependable ride without breaking the bank.
Additionally, cars like the Honda Accord and Toyota Camry are known for their long-term reliability, making them smart choices for those seeking a lease with low maintenance costs. (Note that maintenance coverage can typically be included as an add-on within a lease agreement.)
According to Lease End co-founder Zander Cook, the high residual values on these cars are mostly driven by their popularity. “Lots of people want a nice, 3-year-old RAV4 or Accord," he explains. “So that’s what causes them to be valuable and have high resale values.”
We've analyzed data from all Lease End transactions in 2023 to identify the most popular cars for lease buyouts, then ranking that list in order of highest average equity retained with the buyout.
These cars not only offer a great driving experience but also hold their value well, making them excellent choices for leasing.
The average equity retained for each of the 10 most common lease buyouts by model are as follows:
Residual value is a key factor in determining the cost of leasing a car.
Residual value is the estimated value of your leased car at the end of your lease term. A standard lease term is 3 years, so the residual value of a vehicle reflects its depreciation over that period of time.
Vehicles with high residual value retain a larger percentage of their original value over time, minimizing the depreciation costs associated with leasing.
Read More: A Quick Guide to Residual Value in Leasing
Brands like Mercedes-Benz and BMW are known for producing cars with especially high residual values due to their quality craftsmanship and strong brand reputation, making them attractive makes for drivers looking for a luxury vehicle that holds its value well.
Luxury cars also (unsurprisingly) retain significant equity.
Here are the top 10 luxury cars with the highest average equity during a lease buyout according to our 2023 data:
Even if your car isn't on the list, you may still have equity waiting to be unlocked. With inventory and supply-chain shortages improved, but still impacting the used car market, now is a great time to consider buying out your lease. At Lease End, we can help you access that equity and get the most value for your vehicle.
Whether you're driving a top car for building equity or a luxury vehicle with high equity potential, knowing your options can lead to significant savings and benefits. Unlock your equity today from the comfort of your couch by entering your license plate number or VIN.