Before Buying Out Your Car Lease This Year, Consider These Factors First
We’re living in some crazy times when it comes to buying and selling cars. Fortunately, it’s still a seller’s market, so if you have a leased car coming to the end of its term, you may want to consider your options. Don’t worry; your options are still the same as pre-pandemic times but with a couple of caveats. Let’s take a closer look.
Buying out your lease could work, but it’s not always the answer
Considering car values have increased in the past year, we would normally recommend buying out your lease since you’ll get a good deal. However, there are certain factors you should consider before doing so. Ari Janessian, an auto broker with Negotiationguides.com, recently posted a video breaking down what you should do before buying out your leased car.
It’s important to make sure you like the car. Simply put, if you don’t like it anymore, just return the lease and buy or lease a different car. Janessian also advises that “if there is little profit potential, just return the car and walk away.” That means that if you’re not going to make a profit by buying the car from the leasing company and then re-selling it, you’re better off returning it.
That being said, if the profit potential is worth the time and effort of buying out the car, then do so and sell it to a third party. This “third party” could be a used car retailer like Carvana, Carmax, a dealership, or a private party.
If you want to buy out your lease, follow these steps
If you decide that buying out your lease is the best option, then consider taking the following steps. The first step is to find out the car’s 10-day payoff amount. This amount can differ from the “residual amount” that’s listed on the lease contract because it includes all of the taxes, fees, and remaining payments on the lease (if applicable).
Next, you should take into consideration what kind of condition the car is in. Does it need any extensive repairs? Does it have an accident showing on the Carfax report? If so, then these factors could drop its value.
After considering any repair costs, it’s time to look at the car’s potential reliability. “Let’s try and figure out how reliable this car is going to be in a few years. Also, consider how often they are redesigning the car. If it has not been redesigned too often and you see yourself driving it, then check out the complaints on CarComplaints.com,” Janessian suggests.
Carcomplaints.com displays complaints submitted by owners of various car makes and models. By combing through these complaints, you’ll get a better idea of any potential problems your car could have later on.
If there are plenty of potential problems, then the car may not be worth buying out.
Check your car’s fair market and trade-in value
After finding out the car’s buyout amount, it’s time to look up the car’s fair market and trade-in values. A good tip is to log into Kelley Blue Book (KBB.com) and find out your car’s value.
Remember to be honest about the car’s condition and input all of its options and accessories. After receiving the fair market value, check on a few third-party sites to get an idea of whether or not you could make a profit by buying it out.
You can check sites like Vroom, Carvana, and Carmax to get an idea of the trade-in value. Checking all three only takes a few minutes, and you can do it from the comfort of your own home.
It could be a good idea to buy out your lease if everything checks out
Generally speaking, buying out your car lease could be a good idea in 2022, but only if previously mentioned parameters check out. After finding out the car’s value and taking its current condition into consideration – in addition to any potential issues down the road – you may find that it’s not a good idea to buy it out.