The idea of selling a leased car for a profit was once a foreign concept. Today —amidst an ongoing chip shortage and subsequent new vehicle shortage — selling a leased vehicle for a profit is more common than you think. How can you sell your leased car and make the most money? Which types of vehicles are worth the most compared to their residual value? What automakers are making it more difficult for you to make money selling your lease? We’ll answer these questions and more!
Let’s dive in.
How to Sell a Leased Car
The steps to sell your leased vehicle are not too terribly complex. Here they are from Ray Shefska:
1. You need to first buy the vehicle from the lease company.
2. Call the lease company and get your current payoff. Get a 10 day payoff to allow enough time for the funds to arrive at the bank.
3. Make arrangements to buy the vehicle out directly from the lease company if they allow you to do so. Not all leasing companies allow this, so you will need to ask your particular lender.
4. If you cannot pay cash for the vehicle, make arrangements to finance the balance. Some lease companies can assist you with this. If not, check with your credit union or local bank. We can even help you with that…
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5. If buying the vehicle out with the assistance of the dealer, be aware that the dealer may charge you their doc fee, collect all taxes due, if any, and collect the title and registration fees. They can also assist you with financing if needed. A word of advice: they very well may attempt to mark up the interest rate on the loan and also attempt to sell you their normal F&I protection products.
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6. Once you have purchased the vehicle and had the title and registration issued in your name you can then sell it.
7. To sell your previously leased vehicle for the most money, compare quotes from online car buyers like Carvana and Vroom. We’ve made it even easier for you to get all your quotes in one spot! Simply enter your vehicle information below…
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Learn the tricks to trade-in for the most money. Read the trade-in tactics for success!
8. If you decide to sell to a third party, you will need to provide them with your loan account number so they can contact the lender to get the current payoff. They will make the payoff and you will receive whatever balance is remaining. You will need to provide them with the title if you have it or you will have to sign a motor vehicle power of attorney instructing the bank to release the title to the buyer when the vehicle is paid off.
9. If you are selling to a private party, advertise the vehicle and always be sure to meet any potential buyer in a very public place and bring along someone to accompany you.
10. Never allow the potential buyer to test drive the vehicle by themself. Always accompany the potential buyer on the test drive and have your friend tag along as well.
11. Establish the test drive route prior to leaving and set the ground rules for how the vehicle is allowed to be driven. The driver must obey all traffic safety rules and stay within the posted speed limit at all times.
12. Once you have agreed to sell the vehicle, complete the transaction at your bank, credit union, motor vehicle agency or local police station to protect all parties from any issues. Be certain to make sure that buyer’s funds are indeed good prior to releasing any paperwork or keys to the vehicle.
13. Do not allow the buyer to drive off using your tags and registration.
Which vehicles are selling for the most over their residual value
Our friends over at iseecars.com did an incredible job analyzing millions of vehicles for sale to determine which cars, trucks, and SUVs are selling for the most profit over their residual values. As you’ll recall, residual values are set when you sign your lease. These values are the leasing company’s best guess as to what the vehicle will be worth at the end of the lease.
Because the current new car shortage was not foreseen in 2018, residual values are well below the actual value of nearly every leased car. This means that lessees are in positive equity positions; they can purchase their lease at the preset residual value, and it is worth more on the open market. Incredible!
What vehicles are selling for the most over their preset residual values? First, let’s establish that the average off-lease used vehicle is worth 31.5% more than its original residual value. That’s shocking, but compared to the top ten, it’s relatively reserved!
|Rank||Vehicle||$ Amount Over Residual||% Over Residual|
Which Automakers Are Making It Harder For You to Sell a Leased Car
A host of captive finance companies (financing company’s owned by automakers) have taken steps to make it more difficult for consumers to sell a leased vehicle for profit. Toyota, GM, Honda, Acura, and Mazda are just a few automakers that are no longer allowing third parties to make the payoff payment on a lease. Ford has not allowed third parties to do this for years.
What does this mean?
This means that you have to go to a franchised dealership to buy your leased vehicle before you can sell it to a third party. In the past you could go to Carvana and they could payoff your lease for you. Now, you’ll need to go to the dealership, buy the vehicle, get the title, then sell it to Carvana (or another third party).
Why are Ford, GM, Toyota, Honda, and Mazda doing this? Because it increases the chance that the dealership will be able to get the off-lease vehicle from you. Dealers are short on supply (cars to sell), and by forcing lease customers to come back to the dealership they are increasing their chances of buying the car from you.
My leased Honda CRV is worth about $5,000 more than my payoff to buy it, but the price of new cars is above MSRP and the selection is very limited. I’ve chosen to extend my lease on the Honda for 6 months and see what the situation is like next spring.
I bought out the lease in my 2018 f150 and call sell it for a profit. However I’m just going to overpay for a lease on a new truck so without the option to sell my 2018 and “not” rebuy or re-lease , I’m not sure if selling is an option. Not really a profit if overpaying for a replacement.
I’m in a very similar situation with my own ‘18 F-150. Wondering if the positive equity (anywhere between $3k-$5k) is actually worth it, or if I should just stay put in my truck and extend my lease. My current monthly payment is at least $150 (but realistically probably even more) less than a new lease payment would be.
The dealership that leased me my Mazda 3 in 2018 refused to waive the return fee of $400. I explained the car only had 21k miles on it in mint condition and was to be returned when the pandemic was crushing new car sales. I stated by waiving that $400 fee would do me wonders since I was now unemployed. The dealership refused, despite knowing the buy-out from the bank was only $11k and other 2018 Mazda 3’s with more miles were selling for close to $18k. Pissed that the dealership obviously was looking to make a major profit and told me to pound sand, I called the bank and asked them if a dealership or 3rd party could buy out the remaining balance. The bank said they didn’t care who bought the car and if I took care of it before the car was due back at the dealership they’d be thrilled. So I called around and had quotes from seven groups, and three came back with higher offers when I showed them what Carvana and Carmax were offering. At the end after a quick inspection, Vroom paid off the balance with the bank and sent me a check for the difference. When the dealership asked if I bought the car from the bank or schedule a time to bring it back, I kindly said since you refused to waive the return fee I sold the car myself with the banks help, and let someone else make the massive profit off a 3 yr car with barely 20k miles on it. Your greed cost your dealership probably an $8k profit flip. I’ll never own another Mazda because that experience annoyed me.
Hi David, You said: “I called the bank and asked them if a dealership or 3rd party could buy out the remaining balance. ”
My lease is held by GM Financial and my Registration shows WF bank on it (Wells Fargo likely).
Can I just call Wells Fargo and try to do what you did? I only have one month left on my lease.
Will they need some kind of paperwork from me or is the Vehicle VIN/License number all I need to give them?
Hi, I am also in the same boat. My 2019 Subaru Outback Limited is coming to end of the lease. My residual value of this car is $19,800 or so. And Carmax is offering me $30,000 to buy this car. I only have 16000 miles on it. I still cannot decide what to do. If my understanding is correct with simple calculation, if Carmax buys with $30,000, they will pay to Subaru financing company $19,800 plus tax, about $22000, so they will send me $8000 check? Really how does it work like that? Or I get less for some reason. Subaru was sending me special offer since I am already under their financing company to lease, they were saying low monthly payment for brand new outback lease or payments for purchase. If I sell my car to Carmax, I will lose such offer and buy the car with this high price as new customer? After I sell car, I still need a car to drive, so I am planning to move on to brand new Outback. Even with $8000 case I had, buying a new car require high down payment of $3000 to $4000, and still monthly payment of $600 to $700/mo for 60 times payments according to their site showed. If I trade in, lease price they offered was like less than $300, and purchasing price of less than $500/mo. I am not sure if it is still available, but they sent me a letter saying so.