The idea of selling your leased car for a profit was once a foreign concept. Today —amidst an ongoing chip shortage and subsequent new vehicle shortage — selling your leased car 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 your 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.
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.
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, contact third party used car dealerships such as CarMax, Carvana, Vroom, Shift and others to see what their offers are and then decide whether or not you would want to sell to one of them.
8. If you decide to sell to a third party as mentioned above, 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.
14. Rinse and repeat… I’m just seeing if you are paying attention 🙂Become a FREE YAA Member
Which vehicles are selling for the most over their residual value
Our friends over at iseecars.com did you 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 your 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 their leased vehicles 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.