Many dealerships neglect to mention this when returning your leased car.
Published on March 1st, 2019. Last Updated on .
Whether you're considering a lease for your next car or currently have a car on lease, you're probably aware that a lease gives you no ownership. Once the 36 months are up, you drive the car to the dealership's lot and walk away (assuming you haven't gone over your mileage allowance, or damaged the car). Many dealerships processing end-of-lease returns neglect to mention an important detail at this point. In some cases, when a lease is returned, the car has equity on it worth hundreds or even thousands. It's called lease equity, and it's money that should go in your pocket.
What lease equity means
When you lease a car, you don't get to drive it as much as you want. Rather, the lease is made out for a specific mileage level. Depending on the model and contract, you could be allowed anything from 30,000 miles to 60,000 miles in the three years that you keep the car. If you go over your mileage limit, you will be charged for overages when it's time to return the car at the end of the 36-month lease period. This can be an expensive miscalculation on your part, so be careful to not exceed your mileage limit, unless you're prepared to pay up at the end.
Should the opposite happen -- if you manage to drive less than you're allowed -- you'll have ended up paying more for the car than you've actually used. It's this difference that makes up the equity that you have in your car. When the dealership sells the car on the used market, they are likely to get more than they originally hoped for--as they expected the car to have more mileage. They should give you a share of this windfall. Depending on the model and how many miles you've managed to save, you could have equity worth a substantial sum of money in the car.
What do you get?
Most dealerships don't pay cash for the lease equity that your car brings them. Rather, they offer to give you credit for what it's worth, should you decide to lease or buy a new car from them, or even if you decide to buy the car outright, rather than return it. Unfortunately, dealerships are often less than upfront about lease equity, and often fail to bring up the subject in the hope that their customers won't know enough to ask.
Make sure that you get what's due to you
Before you hand in the key at the end of your lease, it's important that you look at the odometer and determine how many miles you've saved. If it's a substantial number, you should bring it up with the leasing department employee in which you are working. Doing so could save you a lot of money.