Usually when a consumer rents a car, they will not be in a position to make money on that agreement. Plus, if they want to get out of that lease early, it can get very expensive. Due to the current madness in the used car market, however, some leasing cars can mean profits for lessors. Just be careful, there’s something on hold.
our friends iSeeCars Examines growth in used car prices and compares estimated residual (resale) value for different models in a new study. What they found is that some models are worth much more than expected. This could mean that the lessee has some cash in his pocket if he decides to sell that lease rather than give it back.
From the study:
According to iSeeCars.comIn the latest analysis of nearly 10 million car sales, the average three-year-old used car costs 31.5 percent, or $7,019, which is higher than the estimated residual value at the beginning of its lease term. iSeeCars compared the estimated three-year residual values of new cars from 2018 to current used car prices for three-year-old cars to see which could be purchased at the end of their lease term and with the highest profit. can be sold for.
Although these numbers are very surprising, I think it needs to be defended a bit. I don’t want you to think that just because you’re leasing a Tiguan, if you buy that lease and resell it, you’re going to make a profit of $8,000. As a professional car buyer, I have advised dozens of my clients to obtain purchase offers from Carvana, Vroom, Carmax, and local dealers with currently active leases. Of course, they will then compare those offers to the buy-out amount on their lease. There has been a consistent pattern of buy offers that are significantly higher than residuals/purchases. However, I have so far seen differences of up to $7,000 or more. Remember, your car is worth what someone is actually willing to pay. So if you are leasing any of these cars, get genuine offers from organizations that are going to give you money, then compare that to how much you owe.
Too, As I mentioned in a recent post, some brands don’t allow what’s called a “third-party lease buyout.” That is, Carmax, Carvana, or any other dealer cannot simply purchase a lease from the leasing company and apply whatever equity you have to your next purchase. Many brands are restricting these practices, but individual lessees can buy the car for themselves and choose to resell it elsewhere. Buyers should be aware that if you buy your own lease to “flip it,” you’ll need to pay your local sales tax on that purchase, deducting any potential profits.
Lastly, I’ve seen many consumers focus on the potential benefits of their older cars, but they haven’t thought about what the price will be upon replacement. Inventory is thin and deals are hard to come by. It often happens that any profit made on the sale gets nullified on the next purchase as many popular models sell for MSRP or more. It’s always important to examine the big picture before deciding to off-load your lease.