If your three-year auto lease is coming to an end soon, be aware that your car may be worth more than you realize.
The average trade-in value for the year of the model is higher than the residual value at the end of the lease. You may be able to profit off a car you turn in to the dealership.
The values are completely different from the residual value estimates.
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Demand for new vehicles has outpaced supply because of a global shortage of key components. The manufacturing supply chain could be disrupted by the Russia-Ukraine war.
The Bureau of Labor Statistics shows that the used-car market is up 41.2% from a year ago. The average price for a 1- to 3-year-old car is more than 50% higher than it was in January 2020.
The Lexus IS 300 has the biggest jump between its current trade-in value and the residual value it was assigned at the beginning of the lease. The average price of the car when traded in is more than four times higher than the estimated residual value.
The Ford mustang has gained the most, with an average trade-in value of $29,215 and a residual value of $17,363.
When your lease ends, you may be able to take advantage of that positive equity.
If you were to buy the car off a dealer lot, you would be paying more than you would for the lease, so it would be wise to buy out the lease when it ends.
If you don't want to deal with fighting for inventory or paying over the sticker price for a new car, look at the buyout.
If you want to see if you can take advantage of the equity in the car, you need to know what it is worth. You can do this on websites. The retail price will be a few thousand dollars more than you would get by trading it in or selling to a dealership.
If you wait until the lease is up, you should determine the buyout amount, which is the same as the residual value. There could be fees involved in buying it out early. You could buy out the lease and then sell the vehicle for more on the open market.
If your financing company allows you to sell the car to any dealer you want, you should check it.
If you want to return a Honda to a Honda dealer, you have to do it at one of the brand's dealerships.
If you're allowed to sell the car elsewhere, you could look at used car dealers to see where you could get the most money. If you can do a third-party buy out, try to sell the car to a dealership that sells the same brand of car.
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