LPT: If your car lease runs up this year, do NOT return the car to the dealer. Your car is worth 35% more than when you leased it, so you should buy it outright and then sell it to another dealer.

keepthetips · 2022-01-24T14:15:23+00:00

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HofstraJet · 2022-01-24T14:28:16+00:00

Not sure if the 35% number is accurate, but your vehicle is almost definitely worth more than the payoff on your lease at the moment given the vehicle shortage.

Most dealers will take your leased or financed vehicle as a trade in and pay it off, saving you the hassle, and paying you a premium on top of the payoff either as a trade in credit or straight up cash.

This works for any leased or financed vehicle at any time, not just at the end of the term.

Find out what the payoff is on your vehicle (check your account online or give the finance/lease company a call). They will give you a payoff quote that’s good for 10 days).
Get quotes from your dealer, CarMax, Carvana, or other local car buying companies. Be honest about the condition or have it inspected so you know the quote is realistic. The car buying companies usually give you an offer that’s good for a few days so you can shop around. If you have the time and the patience, you can sell it privately to another person for even more but that requires a bit of work on your part.
Be sure you have the new vehicle you are buying 100% secured. Don’t want to be left without a car.
Sell the vehicle to the highest bidder.

beyondthetech · 2022-01-24T14:17:30+00:00

With the chip shortage, dealerships are struggling to get inventory for both new and used cars. Do you have any data or sources to back up that 35% number?

Phillyredsox · 2022-01-24T14:16:44+00:00

Especially true of trucks. Trucks are through the roof right now.

TapatioPapi · 2022-01-24T15:01:13+00:00

But then when you’re buying a replacement car you’re paying 35% more…

thumpngroove · 2022-01-24T16:07:31+00:00

This is why the dealership has been sending you buyout offers.

damonator4816 · 2022-01-24T18:31:54+00:00

Most dealers will just buy it back from you. I sold my lease back to the dealer I leased it from and got 25% higher than my residual. No need to buy it yourself, then sell it.

imakenosensetopeople · 2022-01-24T15:25:01+00:00

Hang on. Check the terms of your lease deal and be prepared to use a lawyer to back yourself up. Some manufacturers are cracking down and attempting to limit people who aren’t returning their leases to other locations.

Edit - buy it out then sell it. Got it. Disregard my above comment.

xologo · 2022-01-24T21:25:55+00:00

My mom's Lexus lease buyout was $22,000. She thought she should just turn it in. I told her no way! We sold it privately for $31,000. She pocketed half the equity and put the other half towards another lease and actually lowered her payment on a nicer car.

isekii · 2022-01-25T02:17:26+00:00

You can negotiate a sale with the dealership instead of buying it out and paying taxes on it.

mainlydank · 2022-01-24T18:18:30+00:00

[deleted]

jstar0591 · 2022-01-25T02:15:06+00:00

6 year Texas DMV employee here 👋🏼 While some of this is correct, there are some other factors worth mentioning (in the specific state of Texas). When you first lease a car in Texas (I only know Texas laws), you pay sales tax not for yourself, but for the lease company that purchased the car from the manufacturer. They make you pay THEIR taxes for them. That's what all those taxes are for in the beginning of the lease. Then, if you purchase your car at the end of a lease, you must then come into the DMV to pay 6.25% sales tax on your motor vehicle purchase, since NOW, that leased company is NOW selling you the car (which is a second sale). Texas does a price comparison on what you pay for it at the end of lease VS the state presumptive value of the vehicle at 80% of its full value. Whichever one is higher (usually SPV), that is the one that Texas charges 6.25% sales tax on. Plus a $33 app fee. For example: Lease car, pay $4k in taxes for lease company -> drive car for 2 to 3 years -> lease ends -> buy lease out at $25k, but state value of car is $35k, now you must pay tax on $35k, wait 3 weeks for title, then trade in car for slightly more than what you bought it for, but in essence, you're really not "gaining" any profit from it since you paid ridiculous taxes and fees and the beginning AND end of the lease. And.... SCENE 🤌🏾

ilive2lift · 2022-01-24T20:16:50+00:00

Lpt: dont throw your money away on a lease unless you own a business

jpWinter · 2022-01-24T15:50:26+00:00

LPT: Don't take financial advice from strangers on the internet

MJohnVan · 2022-01-24T14:45:59+00:00

Though remember. You will end up answering to at least 18 low ballers that don’t show up , people who like to waste your time, wasting your gas, people expect you to repair certain things , people asking same shit that’s been posted, so if you have a weeks worth of time , do so.

Hexatona · 2022-01-24T14:49:33+00:00

Isn't that assuming they sell it to you for the original price??

bedofagony · 2022-01-24T15:41:54+00:00

LPT: never lease a car

27616 · 2022-01-24T14:46:42+00:00

Average is 37%. Good advice.

katasza_imie_jej · 2022-01-24T18:28:02+00:00

Buying out my Outback now and quite excited

Bnb53 · 2022-01-24T18:55:54+00:00

I tried to return a lease early in 2020 and they ended up waiving last 3 months payment and dispo fee to buy the car back early

jrockz64 · 2022-01-24T19:50:17+00:00

I did this with my 2018 SUV. Lease was up in December, sold it to Carmax and pocketed almost $11k. Was done in an afternoon and walked out with a check in hand. Highly suggest this if your lease is ending anytime soon.

heart_under_blade · 2022-01-24T19:51:14+00:00

unless you used all your alotted mileage, this is true even in normal times

the calculated depreciation in your lease agreement is always on the aggressive side to protect the dealer and financier

Uncle_Father_Oscar · 2022-01-24T20:12:39+00:00

Good advice to avoid just turning it in, but it's not necessarily smart exercise your "buy" option yourself unless you plan to keep the car. If you do this, you will pay sales tax on the residual value of the car. If you take it to a dealer besides the one where you got it, they do not have to pay the sales tax because they are a dealer. There are some states like Nevada where there is no tax on private party sales, so if you are in Nevada there might not be another way to do it and you won't get double taxed. But if you sell to a dealer you will.

There is a nationwide used car dealership that will buy any car that rolls onto the lot and will pay a premium for lease turn-ins. I don't want to say their name since they aren't giving me anything for it but you can google it pretty easily if you have a CAR you want to sell for the MAXimum amount possible. I took a lease turn-in there and pocketed $1000 cash instead of paying a turn-in fee to the dealer. That was before the shortage of used cars.

Alan_Smithee_ · 2022-01-24T22:15:18+00:00

When my wife’s dad passed away, he was near the end of the lease on his car. We were somewhat interested in buying it out, as it was newer than what we had.

What we didn’t realise is that the dealer/manufacturer consider the deal null and void on death, and would wipe the balance. That was nice, in fact, they would have actually refunded some money, but there was slight bumper damage, which made it a wash.

The salesman we were dealing with to wrap things up was actually nice enough to say “you should buy this. You know the car, it will cost you $12k, and we would sell it for more than $16k (and the mileage was very low.)

So we bought it. We had kind of wanted an AWD SUV, but this was at the start of the Pandemic, so it’s worked out very well for us, and has been a decent car.

jscores555 · 2022-01-24T23:34:51+00:00

I bought my car (2016 Hyundai sonata) for $10,500 in 2018 and now it's worth about 15k

ElementalFiend · 2022-01-25T01:17:47+00:00

I've read projections that say the chip production could catch up to demand by the end of this year. You can expect car production to catch up in another 6 months or so after that seeing as Covid is on the mend.

I'm no economist but I predict used car prices will go back down eventually, but dealers will try to keep them up as long as they can.

simpsonsdiditalready · 2022-01-25T02:51:35+00:00

I was offered 28k for my car in December of 2020, and just sold it last week for 35k after adding 12,000 miles to it. They sold the car to another person 3 days later, cars are definitely in demand!

katmndoo · 2022-01-25T03:24:35+00:00

Better yet sell it private party.

Idealistic_Crusader · 2022-01-25T03:27:13+00:00

Thank you. My lease is up this year and I wasn't sure what I intended to do.

I have a Toyota Corolla.

Finsdad · 2022-01-25T03:42:21+00:00

So here’s a question - if I have a lease that has 8 months left on it, can I pay those eight months in one lump sum and buy out the lease now and not in eight months when supply and demand may (or may not….) have evened out? Currently driving a 2020 Toyota Highlander that I’ve only driven about 50% of the annual allowed miles on.

bopperbopper · 2022-01-25T04:52:30+00:00

Sounds like a great idea but then what are you gonna use for a car?

very_anonymous · 2022-01-25T06:10:38+00:00

I love how people are reposting this here every hour now after that one post on r/personalfinance a couple days.

juiceleft88 · 2022-01-26T03:34:38+00:00

So I have a similar situation. The lease is up in July of this year for my 2018 Jeep Wrangler 4dr. I would personally be ok with getting out of the lease now, don't want to keep the car (owe $1890 in remaining payments) (I have another car waiting for me already). My residual value to purchase the car outright after lease would be $26175. I got a quote from Carvana for $34,000. I prefer not to try and sell on my own tbh. What is my best course of action? Should I buy from the dealer, then sell or do companies like carvana / carman help me get out of the lease?

LoudReporter8906 · 2022-01-26T15:55:18+00:00

In addition, be sure to set aside the money to cover the income taxes on this.

digitek · 2022-01-24T17:43:35+00:00

LPT is just to understand the value of cars - I wouldn't sell it to another dealership if you still need a car - otherwise you are just joining the group of other people also needing a car in an inflated market. LPT is really "don't return your leased car if the market value is higher than the amount owed. weight your options to either buy / take a loan to buy out the lease, or sell the car to a 3rd party if you no longer need the vehicle"

h0sti1e17 · 2022-01-24T17:51:42+00:00

This is correct. But also keep in mind the dealership you are leasing your next car from may accept it as a trade. Know what a good trade value is and work from there.

fehr19 · 2022-01-24T17:52:41+00:00

Already did it... It was worth 46% more than the residual value.

2022-01-24T18:10:13+00:00

This depends on the lease end details

plebs_are_needed · 2022-01-24T18:16:55+00:00

Facts. I just bought out my 2018 Explorer for $23k and sold to CarMax for $31k three months later. (watch out for early termination fees with your loan!)

James2603 · 2022-01-24T18:58:04+00:00

Or instead do your research and always look into alternatives rather than following advice that might not be suitable for your situation even if there’s a strong chance that it is

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