How to End Your Car Lease Profitably
When leasing a car, a risk is taken. Most of the risk, however, falls on the leasing company. If the value of the vehicle at lease end is much less than the upfront residual value, the lender will take a loss. If the value of the vehicle is more than the upfront residual, the lender can make additional profit by selling the vehicle. Instead of letting the lender make this profit, you can sell the vehicle yourself and keep whatever difference you draw; all you will owe the leasing company is the upfront residual.
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Instructions
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Maintain your vehicle according to the manufacturer's recommendations. Keep a record of all services performed; service records may help you sell the vehicle for maximum profit at lease end.
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Don't go over your mileage limit. The estimated residual value in a lease is determined partially by the mileage plan--driving in excess of your mileage limit could reduce the value.
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Check the value of the vehicle two to three months before the lease is up. Determine if you'll be able to sell it and end your lease profitably. If the current value is far less than the upfront agreed-upon residual value, you may not be able to end the lease profitably.
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Market and advertise the vehicle two to three months prior to the lease ending. It can take awhile to sell a car yourself. Starting early will increase your chances of finding a buyer before the turn-in date.
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Negotiate with potential buyers and agree upon a selling price. Use your residual value as your bottom line--any amount you can draw for the vehicle over the residual will be money in your pocket.
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Contact the leasing company to obtain the correct title transfer forms. Each lender has a different system for processing lease-end purchases and transfers. Coordinate with the buyer's finance source to pay off the amount owed to your leasing company.
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Tips & Warnings
If you receive a suitable offer a month or two before your lease is up, go ahead and complete the transaction. Much can happen to change a buyer's mind in a couple of months. You'll need to add the sum of your remaining payments to your residual value--this will equal your total payoff.
Some auto lenders have end-of-lease fees on top of the residual. These fees can range anywhere between $200 and $500. Make sure you consider this fee when determining your selling price.
If the current value of your vehicle is less than the residual, you'll be better off turning the vehicle in. You won't make a profit, but you won't have to come up with out-of-pocket expenses, providing that you've adhered to the terms of the lease contract.
