Every time you go to the dealership to turn in your leased car or truck, it is wise if you assess its value first. If you don’t do this, there’s a good chance that you will miss the opportunity to get a significant amount of cash. This predicament is particularly true for those who have leased traditional trucks and SUVs.
Oren Weintraub, the Authority Auto president, said the following: “That money, that equity, is yours. Period.” But of course, you cannot expect that all people know about this.
One should know that these leasing companies are capable of predicting the worth of vehicles at the end of their terms. We call that as the residual value, and it is the very basis for calculating the lease amount. Moreover, the residual value is the price of the car that you can opt to purchase at the end of its lease.
What Is A Lease-Car Equity?
Leasing companies are proficient in assessing the residual value of their leased cars. However, because there are fluctuations in the automotive market, there are certain vehicles that could get “more worth” than their original residual value.
Keep in mind that you have the right to purchase a vehicle after its lease term. Because of this, you can have the opportunity to make profits, given that the estimates of the company are lower than the market value of the vehicle. On the flip side, if the car does have a higher worth than its residual amount, you simply just have to turn it in. By doing so, you will no longer have to pay for extra fees.
In various situations, customers opt to utilize the equity of the leased car they turned in as a form of down payment for the next car they want to lease or purchase. Consequently, they will find out that the monthly fees for the new car they got are lower than the monthly payment of the leased vehicle they just turned in.
Of course, it is also important that you know that not all returning leased vehicles have equity. But don’t let this stop you from checking the market value of your vehicle as its lease date comes near.
Does My Lease Have An Equity?
One way of checking if your leased vehicle has a lease is by going to the dealership. You can personally inquire about them regarding this matter. If you want a foolproof method, you can check the appraisal page of Edmunds. On this particular page, you will be able to get the private-party and trade-in values of your vehicle.
Next, you need to look for the residual value of your lease contract. Once you get it, subtract the residual value to the trade-in value. The number that you will get is the approximate amount of equity that you have for your lease. Furthermore, be reminded that this value is still negotiable with the dealer.
By becoming well-versed to the market value of the leased car and other details on the pricing, you will be able to have better leverage in the negotiation.
How To Turn Equity Into Cash
If your leased vehicle has equity, there are means that you can turn the latter into cash.
Sell the leased car to family members, friends, or neighbors – This particular method requires utmost trust. It is the very reason why the people allowed here are those who are close to your social proximity. In this method, you will get the private-party price of the vehicle, which is downright higher than the trade-in price of dealers.
After you find a buyer, you let that person mail the leasing company the buyout amount. The moment you got the title, which will be sent by the leasing company, sign it so that the interest of the car will be released. The title will then be given to the buyer. The new owner will be able to register the car. Keep in mind that if the buyer will wait for more than ten days before he or she will register the car, the state might charge you both with sales tax. This one can depreciate your profit.
Use it as a downpayment for your new vehicle – In this case, the equity of the car you currently lease becomes hard cash that you can use as a down payment for your next vehicle. If you know that you have equity, take your leased vehicle to any dealer so that you can start a new sales contract. At this point, you might need to negotiate as aggressively as possible. After all, not all dealers will give you the same value for the buyout amount of leased cars.