Ending Your Car Lease? Here's how you can profit from the deal
The 2007 Porsche Panamera is expected to generate the highest returns among those who leased it and choose a purchase option.
Porsche
One of the main arguments against leasing a car is that, unlike a vehicle that is bought and financed directly, at the end of the term you hand it over to the dealer and leave without warranty. But that's not always true. Indeed, given that used car prices remain historically high, largely due to increased demand and limited supply as a result of the pandemic-related slowdown in new vehicle sales, it is quite possible that You have hidden capital in your harvest lease.
About 4.2 million vehicles were rented in 2017, with most of those contracts expiring in 2020. And with many renters choosing to extend their leases for a few months as part of goodwill efforts. of the coronavirus from automakers, a large several of them end by the end of the year.
For those who may be new to the game, this is how a car leasing works. Payments are essentially based on the difference between the transaction price of a vehicle and what the leasing company expects the car to be worth when the term ends (its "residual value"), less the amount of cash owed at the time of sale. signature, financed with current interest Speed. The terms generally include a provision that allows the lessee to purchase the vehicle at the end of the lease for a preset “purchase price”, which is generally equal to or close to the residual value.
If you have leased a vehicle and the term is nearing, you may want to do some research to see how the purchase price compares to the market value of the vehicle. Check online valuation sources, entering make, model, trim level, options, mileage and condition. If the value of the vehicle is greater than the purchase, you can either get ahead of the deal by taking the call option and selling it to a dealer (the easiest way out) or buying the vehicle yourself and selling it for a little more money at a party. private. You can then use the proceeds as part or all of your down payment on your next vehicle.
It's a good idea to compare the vehicle with the used car departments of local dealerships, or you can look up appraisals at chains like CarMax and Carvana or online sources like Edmunds. You will need to follow the terms of the lease exactly here to avoid sacrificing the ability to save some cash. Be sure to go over the lease in advance to determine if you should return the car only to a franchised dealer that sells the same brand, or if you are free to sell or trade it at any dealer.
Of course, whether in good times or bad, some vehicles inherently hold their values better or worse than others. Residual values are essentially educated guesses, and future market forces ultimately determine the true value of a given vehicle over the next three years. Who could have anticipated COVID-19, right? So which models are most likely to turn a profit when their leases expire this year? The valuation experts at Edmunds took a deep dive into all 2007 leased vehicles, looking at their original MSRPs, average purchase prices, and current private parts and trade-in resale values to determine exactly that.
While dealerships are more likely to offer a price closer to the trade-in value of a vehicle, it is a lot less work and financial effort than buying the lease (which will likely involve obtaining financing) and selling it to an individual buyer.
Turns out that the model most likely to make the biggest profit above its purchase price among all vehicles is the 2017 Porsche Panamera sports sedan, while the Ram 1500 pickup was found to be the top-grossing among major brands .
These are the 2017 model year leased vehicles that Edmunds expects to make the highest average earnings when bought and sold to a private individual:
Conventional models
Ram 1500: $ 4,219
Chevrolet Camaro: $ 3,587
Ford Mustang: $ 3,710
Dodge Charger: $ 3,637
Jeep Renegade: $ 3,392
Dodge Challenger: $ 3,168
Jeep Cherokee: $ 3,129
Toyota Tundra: $ 3,054
Toyota Prius Prime: $ 2,869
Jeep Grand Cherokee: $ 2,854
Luxury vehicles
Porsche Panamera: $ 11,821
Porsche 911: $ 10,079
Mercedes-Benz GLE-Class Coupé: $ 7.224
Mercedes-Benz G-Class: $ 6,889
Lexus RC 350: $ 2,908
Lexus IS 350: $ 2,875
Lexus RX 350: $ 2,709
Cadillac Escalade: $ 2,596
Lexus RC 200t: $ 2,536
Porsche Macan: $ 2,495
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