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 purchase a well maintained car at an affordable price. The resale value is a highly subjective figure and most auto car dealers cannot correctly calculate it.
Due to 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 purchase the car. You can then take the car to another dealer and sell it for cash. In some instances the auto dealer will pay the remaining lease payments and you get a check for the equity portion of the lease.
Purchasing car then selling to private buyers: Instead of selling your car, back to the dealer or another one you can have your family or friends inspect the car then sell it to them. In this case, you can make more money than what you paid for resale value. To avoid double sales taxes you can have the private buyer send out a check to the dealership, who will process the title and give them to the buyer.
Purchase 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 with 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 will get at the end of the lease is to locate the right car. Cars depreciate differently. If you have a car that has a high depreciation rate then it loses its value. Market rates vary and you can find yourself selling the car at either a higher rate or lower one than the market rates. Cars that are known to hold their value well include Toyotas, Porsche or Honda. Lease payments work is 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 carefully read the lease terms. The devil is in the details. While you could be budgeting on how you make cash at the end of the lease you need to inquire whether the dealer allows for a buyout. Find a buyout amount that is close to the residual value. Find a car with low mileage and that is free from dents. Before signing the lease find out how much the money factor rate is and compare this with other dealers. Negotiating the terms at the beginning of the lease ensures that you get more cash at the end of the lease.
Lease terms often specify the allowable mileage. Any amount above this and you get charged extra. Going over the cap means that you pay more for your lease. Cars with low mileage also have a better resale value. This means lease the car and do not drive it. Most of the car depreciation rates are calculated with the car’s mileage in mind. Make every effort to drive the car as close to the allowable mileage as possible.
Taking care of the car
At the end of the lease term the lessor will send an inspector to examine the car for dents and any malfunction. If the car is not well maintained you will be charged extra. It is imperative that you avoid any unnecessary costs. Drive the car safely. Always give the car a good clean both inside and outside. Also, wax it before resale. It is tempting to try to add extras to your car like car stereo, subwoofer or new rims but this only add to the charges by the dealer. Try to return the car in the condition that you received it. Excessive wear and tear means you incur additional charges at the end of the lease.
Do not delay when returning the car
Most car dealers charge extra if you delay returning the car on the due date. Instead you should use this time to research on the market value of your car model on online car dealer websites. If you discover that the market value of the car is lower than the resale value then it is wise to just return the car to the lessor. However, if the market value of the car is more than its residual value then you are up for some extra cash. Before returning the car you can drive around, looking for buyers. This ensures that you have a solid deal once you buyout the car.
Violation of lease terms
If you do not want to incur additional charges then do not violate the terms of the lease. Leasing terms have prescribe negative consequences for lease violation. Most people do not read this terms and it comes as a shock when the lessor repossess the car or your credit score is affected negatively. It is wise to have a lawyer or friend who understands leases accompany you during lease signing. With them around you can detect hidden clauses and charges. Any conversations you have with the lessor have them done through email. This gives you evidence should the lessor backtrack on what they had said or promised.
Leasing a car is a great way to have possession of a more expensive car model while you make affordable monthly lease repayments. At the end of the lease you will be required to return the car in good condition. You can make money from your lease if you discover that the market value of the car is more than the residual value. Otherwise if values are in the reverse just return the car back to the dealer. Always ensure that you keep the car in good condition so that you do not pay extra charges.