It’s a perfect time to sell a leased car

One question we get a lot here at TRED is ‘can I sell my leased car?’

The answer is: yes—and in the current market, just about everyone has equity, and should be able to sell their car for more than the buyout price. Wherever they are in their lease.

In ‘normal’ times, if you had negotiated a good enough deal when you leased your car, it was possible that you might be able to sell it before the term was up, without losing money. Now, used cars are in such demand—and prices are at such a premium—that pretty much any leased car can be sold at a profit. Even if your lease is up, you should not turn it in; you can almost certainly make money if you sell it instead.

How does selling a leased car work?

When the topic of selling a leased car comes up, a lot of people don’t understand how it works, and say things like ‘but, you can’t sell a car that you don’t own’. But when you sell a leased car, you do pay the leasing company the payoff price (the price the leasing company has set for you to buy the car), essentially buying it from them to sell to the new owner.

Each month, you can request your payoff amount—the current purchase price to buy your leased car—from your leasing company. This is great, because even if the term of your lease isn’t over, you can get out completely, transferring the title and all liability to the new buyer. But this can pose a couple of challenges:

Unless you have the cash on hand to buy out the lease before you sell the car, you won’t be able to provide the title to your buyer right away. You’ll need to collect payment from the buyer, then send it to the lien holder (the leasing company.) Then you have to wait for them to send you the title. Which usually takes 1-3 weeks, sometimes longer than that.

This makes selling really difficult, because a buyer who’s given you a large sum of money isn’t going to be very happy waiting weeks to get the title (and the car. Because you can’t properly transfer liability without the title, so handing over the keys early is not a good idea.) Unless you have the cash on hand to buy out the lease before you sell the car, you won’t be able to provide the title to your buyer right away. You’ll need to collect payment from the buyer, then send it to the lien holder (the leasing company.) Then you have to wait for them to send you the title. Which usually takes 1-3 weeks, sometimes longer than that.

Additionally, if you buy out the lease, most states will require you to pay sales tax on the purchase price. And paying thousands of dollars in taxes on a car you’re going to sell immediately to someone else negates any benefit of selling your leased car.

This is where TRED can help!

Current caveat: some leasing companies have changed their rules

The only limitation on selling your leased car (that typically wasn’t a problem before the pandemic) is that some leasing companies have made it harder for a dealer to buy your leased car—or in some cases, disallowed it altogether.

With used cars being worth so much money now, and because dealers are struggling to keep inventory on the lot, manufacturers really want that leased car back, so they can sell it—at a huge profit. As a result, some of them (like BMW Financial Services, Honda Financial Services, and Mercedes-Benz Financial Services, to name a few) are not allowing third party buyouts. Which means that if you have a lease through them, a dealer cannot purchase it.

You, as the lessee, can purchase it for your payoff price if you decide you want to keep the car. You can, of course, buy the car and then sell it to a dealer or a private buyer, but if you live in a state that requires you to pay sales tax when you buy the car, then you’re taking a big hit by doing that.

Some leasing companies will allow a dealer to buy your leased car, but their payoff price is different from yours—and much higher. Which also makes that not a very viable option.

A few leasing companies do still allow a dealer to buy out your lease, for the same payoff price as the lessee. Currently, these companies are still allowing that:

  • Chrysler Capital – but not within 60 days of lease end
  • Credit Union Leasing of America
  • Jaguar Land Rover Financial (Chase)
  • Lexus Financial Services
  • Mazda Capital Services (Chase)
  • Mazda Financial Services
  • Porsche Financial Services
  • Subaru Motors Finance (Chase)
  • Toyota Financial Services

How TRED makes it easy and safe to get out of your lease

If your car is leased through one of the above companies that will allow a dealer to buy out your lease at the same payoff as the lessee, then we can help! First, we’ll confirm your payoff price with your leasing company, and we’ll net that out of your sale price when your car sells. If your buyout amount is less than your sale price (it’s currently likely to be a lot more, for most leases) we’ll repay the leasing company and cut you a check for the difference. If your lease buyout is higher than the selling price for your car—which is not likely in the current market—then you’ll need to agree in advance to pay your leasing company the difference between the selling price and your lease buyout when your car sells.

When you sell your leased car with TRED, there’s no risk for your buyer at all. From their perspective, the experience is exactly the same as buying any other car, leased or not. Which is a great advantage over trying to sell it on your own.

A traditional dealer can also handle the lease buyout process if you sell or trade it in to them, but they’ll give you a far lower price.

The TRED advantage is that we can handle the lease buyout process just as easily as any dealer, but we also find you a trusted buyer—so you can sell your car as a private party (much higher than dealer trade-in) price.

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