According to a recent report from CNBC, "The average trade-in value of 2020 leased cars is 19 percent more than the predetermined residual value." If you are one of the 3.3 million people who leased a vehicle in 2020 and are getting close to the end of your three-year lease, you may want to buy your lease car rather than just turn it in.
Your Lease Car could be Worth More
2020 Lease Cars worth an average of $4,000 more!
While that 19 percent averages out to about $4,000 more than the lease contract residual value (the car's value at the end of the lease), CNBC says the positive equity is even higher for those who leased a car in 2019, averaging a gain of $7,208. That's like money in the bank if you have a lease car contract from 2019 or 2020.
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While the latest estimates for used car prices are showing a slight decline, according to Kelley Blue Book, the average price paid for a used car in America is around $26,500. Thomas King, president of data and analytics for J.D. Power was quoted as saying, "February 2023 trade-in equity is still more than double the pre-pandemic level." That means you could have positive equity in your lease car.Â
Lease Cars with the Most Value
With this in mind, you may want to look into buying or trading your 2019 or 2020 lease car rather than just turning it in. Of all the car brands and models leased in 2020, the Mercedes-Benz GLS-Class sedan captures the highest worth over its estimated residual value, up 22 percent. That means it may be worth over $11,300 more than expected. And making money on your lease car is not limited to luxury models. According to the report, the Toyota Sienna minivan is worth approximately $8,700 more than its contracted residual value while a Ford Mustang is worth over $8,500 more. Other high value lease vehicles in the top five include the Toyota RAV4 Hybrid that has a value of over $8,470 over its original estimated residual value, and the Chevrolet Bolt EV that could bring you around $8,400 as well.
The Positive Equity Advantage
- If you have a lease on a 2020 vehicle, it may be worth considerably more than your lease contract's assigned residual value and you might be able to use that positive equity as a trade-in or even cash if you decide to buy out the lease. If you buy the car, you'll be getting it for less than if you bought it off a dealer lot.
- Depending on the lease contract, you might be able to buy the vehicle early and sell it for a profit. The finance company may also allow you to sell the car to the dealership of your choice. This is called a third-party buyout and you'll have to check your lease contract for details. Some automakers require you to return the lease vehicle to an authorized dealership.
- You can also realize a profit if you are trading in your lease car for a new vehicle. According to a recent article by Forbes on how to cash in on the high value of your leased car, "A little homework in the months before your lease return can yield significant return toward your next vehicle." The article suggests that instead of buying your lease vehicle outright, you can trade in the leased car and apply the equity towards another vehicle
Let Lithia Help
The first step is to find out what your lease car is worth. Lithia Motors can help with that. We can show you the market value for your vehicle today. In just two steps and ten seconds, you can skip the research process and guesswork. Let's get started:Â
