For many people the most natural thing to do at the end of the lease is to turn in your car.
But you could be walking away from some good money. At the end of the lease, a car is worth its resale value. You can buy a well-maintained car at an affordable price. The resale value is a very subjective number, and most car dealers cannot calculate it correctly.
Because of this miscalculation, you can profit from reselling the car.
Getting cash from a car lease
Resell the leased car: At the end of the car lease, you have the right to buy the car. You can then take the car to another dealer and sell it for cash. In some cases, the car dealer will pay the remaining lease payments and you will receive a cheque for the equity portion of the lease.
Buy the car and sell it to a private buyer: Instead of selling your car, you can take it back to the dealer or to another dealer so that your family or friends can inspect the car and then sell it to them. In this case, you can earn more money than you paid for the resale value. To avoid double sales taxes, you can have the private buyer send a cheque to the dealer, who will process the title and deliver it to the buyer.
Buy a new car: Since you have equity from the first lease, the other option is to use this equity as a down payment for a new car. You will need to talk to your dealer about a possible buyout.
Tips to maximize your cash for the lease
The first thing you need to do to maximize the amount of money you receive at the end of the lease is to find the right car. Cars depreciate in value differently. If you have a car that has a high rate of depreciation, it loses its value much more quickly. Market interest rates vary, and you may find yourself selling the car at either a higher or lower rate than the market rate. Some of the cars that are known to hold their value well include Toyotas, Porsches, and Hondas. Leasing rates work in such a way that if you have a car with a low resale value, you make higher initial lease repayments.
Read the fine print in the lease
Many people do not read the lease conditions carefully. The devil is in the details. You might think about how you will make money at the end of the lease, but you have to ask yourself if the dealer will allow you to do that. Find a buyout amount that comes close to the residual value. Find a low mileage car that is free of dents. Before signing the lease, find out what the money factor rate is and compare it with other dealers. If you negotiate the terms at the beginning of the lease, you can ensure you get more money at the end of the lease.
The leasing conditions often state the permitted number of miles. Any amount in excess of this will be charged additionally. Exceeding the upper limit means that you pay more for your lease. Cars with low mileage also have a better resale value. Most depreciation rates for cars are calculated taking into account the mileage of the car. Therefore, make every effort to drive the car as close as possible to the permitted mileage.
Take care of the car
At the end of the leasing period, the lessor sends an inspector to examine the car for dents and possible malfunctions. If the car is not well maintained, you will be charged extra. It is essential that you avoid unnecessary costs. Drive the car safely. Always clean the car thoroughly inside and out. Also, wax the car before reselling it. It is tempting to try to add extras to your car, such as a car radio, subwoofer, or new rims, but this only increases the dealer’s fees. Try to return the car in the condition in which you received it. Excessive wear and tear mean that you will incur additional costs at the end of the lease.
Do not delay when returning the car
Most car dealers will charge additional fees if you fail to return the car on the due date. You should use the time directly prior to the due date to research the market value of your car model on online car dealership websites. If you find that the market value of the car is lower than the resale value, it is advisable to simply return the car to the lessor. However, if the market value of the car is higher than its residual value, then you are entitled to a little more money. Before you return the car, you can drive around and look for buyers. This will ensure that you make a solid deal once you have bought the car.
Don’t violate the lease terms
If you do not want to incur additional charges, do not violate the terms of the leasing agreement. The leasing conditions contain negative consequences for the breach of the leasing contract. Most people do not read these conditions and it is a shock if the lessor repossesses the car or your credit rating is negatively affected. It is advisable to be accompanied by a lawyer or friend who understands the leasing conditions when signing the contract. With them nearby you can discover hidden clauses and fees. All conversations you have with the lessor can be conducted by e-mail. This will provide you with evidence in case the lessor does not keep his word.
Leasing a car is a great way to get ownership of a more expensive car model while paying affordable monthly lease payments. At the end of the leasing contract, you are obliged to return the car in good condition. You can earn money with your leasing if you find that the market value of the car is higher than the residual value. Otherwise, if the values are in reverse, simply return the car to the dealer. Always make sure that you keep the car in good condition so that you don’t pay any additional fees.