If you’re currently leasing a car, you may have heard that it’s a really good time to be ending that lease. Maybe someone’s told you that it’s a good option to buy out and keep your leased car – or even sell it. We’ve talked about how to do that on our own site. But why is it a good time to do so?
If you’re in a 3-year lease ending this year, you signed your lease in 2019. At that time, your lender may have estimated that your car would be worth around $20,000 at the end of your lease term. That $20,000 amount would have been written into your contract as the buyout (or payoff) amount. And you drove away with your leased car, probably planning to just turn it back in at the end of your lease.
As you know, a lot has changed in the last few years, and we’re now seeing some significant increases in what cars are worth at lease end. So, what’s different, and how do those changes impact your auto lease?
There are a lot of reasons why used-car values have risen, but it mainly boils down to supply issues and chip shortages (part of the tech that makes your car the modern marvel that it is). With manufacturers producing fewer new models, existing models on the lot – and on the road – are in high demand, with prices an average of $7,000 higher than they used to be. And, as a leased-car driver, that’s great news for you.
With today’s car market in mind, let’s break this down a bit. Your lender probably didn’t predict these kind of supply-chain shortages when they estimated that $20,000 buyout amount. And let’s say the market value of your car now – even after 3 years of driving – is $25,000. This means your car is $5,000 more valuable than what your lender predicted. It also means you have positive equity in your car and, perhaps most importantly, it means you can make money off your leased car.
How can you do this? Put simply, you could buy out your leased car from the manufacturer at the payoff price and walk away owning a $25,000 car for only $20,000 (minus any taxes or fees). Or, you could sell the car for $25,000 and walk away with a $5,000 profit (again, minus any taxes or fees). Basically, it’s a win-win for you either way.
The thing is, manufacturers know this is happening, and they’re scrambling to keep their inventory and not lose money. Many companies have imposed stricter rules about buyouts for future leases (or banned them outright) and are trying to make it harder to buy out or sell a lease. We say, take advantage of this situation while you can. Lease End can help you buy out or sell your car, for a fraction of the time, effort, and cost involved with doing it through a dealership.