How To Sell a Leased Car
When you lease a car, you don’t really own it. Instead, you are renting your car from the dealership. But what if you know your car’s value is higher than its list price in the contract? Is it possible to sell your leased car and make some money? The short answer is YES. So let’s take a look at how selling a leased car works.
Here’s how you can sell your leased car (and why it might be a good idea).
Do I have equity in my leased car?
When you lease a car, your payments are based on the residual value of the car. Residual value is the expected value of the car when the lease is over. This value is predetermined and listed in your contract and is based off of the expected depreciation that will occur over the life of your lease.
But these numbers don’t always reflect what the actual value of your car is. If you do not drive as much as they anticipate or the value of your car has held up more than the lenders expected, it’s very possible that you have equity in your leased car. If you return a leased car that you have equity in, you are handing money back to the dealer.
So how do you know if you have equity in your leased car?
Step 1. Determine the current buyout price.
If it is the end of the lease, you can look in your contract to see what the residual value is. It will also note what fees you may be responsible for, such as disposition fees. If it is not the end of your lease period and you are looking to get out of your lease early, you will need to call the leasing company to find out what the current buyout price will be.
Step 2. Find the current market value of your car.
The best way to determine the market value of your car is to do some research online. Websites such as Edmunds and Kelley Blue Book will look at not only the make, model, and year of the car, but they will also take into account how many miles your car has and what type of condition it is in. It’s also useful to look around and see what deals are being made on similar vehicles.
Step 3. Do the math.
By subtracting the residual value (or buyout price) from the current market value you can determine how much equity you have in your leased car. If the number is positive, it might be a good idea to purchase your leased car and either keep it or sell it. If the number is negative, then you do not have equity in your car and it’s probably not a good idea to purchase your lease.
How can I sell my leased car?
In order to sell your leased car, you will need to buy your car first. In the past lenders have allowed third parties to purchase your lease for the list price in your contract if you arranged the buyout. But in recent years this has stopped. Since the contract is specifically between you and your lender, they tend to specify that the buyout price is for you only, and they will charge a much higher amount to a third party.
This means that if you want to sell your car, you need to actually purchase it first. If you do not have the cash to do so, you can secure a car lease buyout loan.
Getting a car lease buyout loan is easy, especially when you use Auto Approve to help you secure it. Once you determine that your car’s value exceeds the buyout price, take the following steps:
Step 1. Get your credit in shape.
In order to secure the best car lease buyout loan you should take the time to make sure your credit is in good shape. Having a good credit score means that you will get the best APR possible, as well as the best loan terms.
To ensure your credit is in the best shape possible, be sure to get a copy of your credit report to make sure everything is correct. You can also request higher limits on your accounts and pay down debts, all of which will raise your credit score.
Step 2: Apply for financing.
If you decide to get a car lease buyout loan, you need to do your homework and shop around. With the amount of lenders and offers out there, it can get confusing. That’s also where Auto Approve can step in and help you navigate the financing world.
You should ideally apply with 3-5 lenders so that you can compare a few offers. You want to compare the following terms when you get you offers:
- The interest rate
- The repayment period
- The prepayment penalties
- The customer satisfaction ratings (look online for these)
- All other fees and terms
If you use Auto Approve, your agent can help you decide which loan will be the best fit for your situation.
Step 3: Sign on the dotted line.
When you find the best loan for you, you can simply sign on the dotted line. The lender will send a check to the leasing company and they will hold the title until you either complete your payments or sell your car and pay off your loan.
Step 4. Decide how you want to sell your car.
There are a lot of different ways you can go about selling your car. Here are a few ways you can sell your leased car:
- Sell to a dealership
- Sell to an online dealer
- Sell to a private party
Selling to a dealership is the quickest option, but it will not be as profitable as selling your car privately. Similarly, selling to an online dealer like Carvana or Vroom is easy and convenient, but will not be as profitable as a private sale.
How can I make the most money selling my car?
You can make the most money by selling your car privately, but there are some steps you should take to ensure you get as much profit as possible.
Gather all of your records.
You should gather all of your paperwork ahead of time to prepare for the sale. You should have:
- The car title. You will not physically have the car title if you use a buyout loan, but you should have all of the information available. The bank will send the new owner the title when the sale is complete.
- Service Records. It’s good to show a potential buyer that the car has been regularly maintained and serviced.
- Sales Paperwork. Have the original sales paperwork ready for the potential buyer to review. This paperwork will list all of the options that your car has, so it can even bump the price up a bit.
- Warranty Information. If your leased car is only a few years old, it may still be under warranty. Read through your warranty to determine if it is transferable.
Get your car ready.
Getting your car in good shape will help you get the best price possible. Give your car a thorough cleaning inside and out. Vacuum and shampoo your interior, polish the interior panels, and give the exterior a wash and polish. Make sure all lights are working properly, the wiper blades are new, and that all of the fluids are topped off.
Take some pictures.
Take pictures of your car when the weather is good. Be sure to get closeups of all special features, such as the sunroof and entertainment system.
Advertise.
Determine where you want to advertise your car. If you live in a busy area, you might simply want to put a for sale sign in the window and park it outside. But you want to cross advertise no matter what. Facebook, Craigslist, and your local paper are all good places to start.
Be smart when showing the car.
Take the proper precautions when trying to sell your car. If you are showing the car at your home, be sure to have someone there with you. It is a much safer option however to meet the interested buyer in a public area.
Sign the car over.
When you get a bite on your car, get a payment as soon as possible. A cashier's check is the best way to get payment. Check your state laws to determine what you need to do to sign the car over to the purchaser.
That’s everything you need to know about selling your leased car.
If you have a leased car that you are interested in selling, contact Auto Approve today! Our agents can help you secure the best car lease buyout loan so that you can get the best deal possible. And if you choose to sell your car, follow our tips to make sure you make the most money possible and stay safe while doing so.
Contact Auto Approve today to get your free quote!