3 Ways to Turn Your Leased Car into Cash

Leasing allows you to drive the dream car and save money. However, this very leased car may well bring you some cash! So, let’s figure out how to earn on the vehicle in these conditions and do it absolutely legally and with no hassle. Accept it as a life hack for the future or act now!

Why Leased Car Deals Can Be a Profit Right Now?

You may probably understand the essence and meaning of leasing, but if there are still some white spots for you here, we will explain everything. The fact is that you take a car under certain conditions, which include fixed monthly payments. Monthly amounts are based on several parameters.

The first parameter is MSRP or Manufacturer Suggested Retail Price. This is the amount that is strongly recommended by the manufacturer of a particular new car for the offer in points of sale. Since the calculation of leasing fees is repulsed from it at first, it is also called initial price.

The second parameter is residual value. This is the predicted price of the car at the end of the leasing period, which depends on many factors, including mileage, depreciation of the particular model, and the period of its stay with the lessee.

Thus, the total lease payment is the difference between initial price and residual value – possibly with the addition of a money factor and some other payments established by the leasing company. This sum is divided by the number of months of the leasing period, and that is how you get the amount per month. Please note that all monetary issues, including these payments and the possibility of buying the leased cars at a certain value at the end of the period are clearly fixed in the contract. And this is when it gets even more interesting.

The fact is that the pandemic and the ensuing crisis caused a stir in the US car market. Manufacturers lack digital components to produce new vehicles. Besides, dealers faced an unprecedented shortage of used cars. Thus, prices increased significantly. It is a paradox; the market price of such a car is already higher than the residual value fixed in the contracts for tenants concluded a couple of years ago. The saying “blessing in disguise” takes on a new meaning; lessees can dictate the terms to make some money even on cars that they do not own de jure.

So, What Do the Dealers Do Now?

Frankly, it’s not easy for them. On the one hand, the increased prices of cars should bring them a sufficient profit, but on the other – the vehicles are sold like hotcakes, so they lack inventory very much. How to make up for this shortage of units?

Some dealers turn to profitable trade-in offers, convincing their customers to hand over their previous cars to buy a new one with benefits. According to some of them, they cannot lose any units in the parking lot, because the situation is unpredictable now.

There were also high expectations, considering the vehicles returned from leasing, but it’s not a piece of cake today, too. According to Ford Credit, about 67% of lessees purchased their vehicles after the termination of their contracts in 2021, while according to GM Financial, this figure is already at 90%. So, the dealers are ready to make concessions in the current situation, and you can either meet them halfway or prefer another way to make money on the lease.

How Can You Make Cash on a Leased Car?

In fact, everything depends on the terms of your contract and the moment of the leasing period you are going through now; usually, it is the middle or the end. Based on this, experts offer at least three options and you can choose the one that suits your case.

Selling Your Contract to a Third Party

This option is logical if the end of the leasing period is still a long time. That is why it is so popular with tenants. In this case, the lessee takes the car, and after a while, resells all the responsibility (and the vehicle, of course) to the third party. As a rule, the buyer is usually large used vehicle retailers like CarMax or Vroom.

As we have already mentioned, the prices of used cars show impressive growth due to the shortage and huge demand. That is why you can count on the money that will cover all your expenses and even provide you with some free cash.

However, we must warn you about a small problem as well. Do not think that lessors are quite simpletons and do not pay attention to these issues. As the demand for used cars is up, many companies (as a rule, most of them are the branches of the manufacturers) just prohibit the sale of leasing contracts to third parties and include this provision in the documents. Thus, tenants have two ways again – to return the car after the leasing period expires or buy it when this time comes.

Today, a ban on such deals has already been imposed by major car manufacturers, including Honda, BMW, Toyota, GM, and some others. This list is expected to grow and soon this condition may become common for all leasing contracts.

Sell Your Lease Back to Your Lessor

A while ago, this idea seemed quite amusing. However, we live in strange times and situations when dealers call the lessees with similar offers become less and less uncommon. You can try this way, although in this case, you need to prepare for negotiations.

As we mentioned above, dealers are ready to provide some bonuses and preferences. For example, they can repay a few remaining lease payments and return the difference in the trade-in price to the former lessee. Do not think that the dealer loses funds in this case; in fact, it gets a car at a price lower than the current market pricing.

However, you have the freedom to choose as well. If the terms of a certain dealer do not suit you, you can turn to another. There is nothing wrong with this; the shortage provides the basis for some gain, and it has always been like this.

Purchase the Vehicle at the End of Your Lease and Sell It on Your Own

This is a great plan for those whose lease is about to expire! Here, everything is simple and strictly according to the terms of the contract; your lease is over, you purchase your vehicle, and then just sell it at the price you set and to the buyer you want. In this case, the leasing company can’t regulate anything, as the car is your property after you pay your price.

As a rule, most leasing contracts concluded a few years earlier contain the so-called guaranteed purchase option price. This is the fixed amount for which you can buy your leased auto after the period is over. And since retail prices for used cars have risen considerably, you can feel this difference at the moment of sale when your wallet is replenished.

At the same time, do not rush to sell the car immediately. Explore your make and model offerings on the market and see if selling to someone like Carvana or CarMax or a private deal is more lucrative for you. In the latter case, you can win even more if you are hard-nosed enough to estimate the cost of the car and do not jump over your head after any proposal.

Conclusion

As you can see, there are several ways to get some cash from a leased car. However, note that in all these cases you will have to give up the car completely. It can be hard, especially if you are stuck to a particular vehicle or you got used to driving all the time.

Such leasing deals to raise money and buy a new car are also a bad idea. Given current prices, you will have to take more loan or enter into another lease and possibly on other terms. In this case, the purchase of the vehicle at the end of the leasing period for personal use or the transition to a new lease deal is a more reasonable solution. However, if you need cash, and public transport in your area works perfectly, you know what to do!