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Can You Sell a Leased Car

Can You Sell a Leased Car?

With rising used car prices or potentially evolving life circumstances, you may be wondering – can you sell a leased car?

The answer is yes; you typically can sell a leased vehicle before your term expires if your needs or finances have changed.

However, there are multiple ways you can sell your leased car and a specific process you need to follow.

The guide I created below covers everything you need to know, from calculating your equity to comparing your lease exit strategy options.

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Can I Sell My Leased Car?

Yes, you typically can sell a leased car in one of three main ways:

  • To a dealership through trade-in
  • To a private party buyer
  • Via lease transfer to another driver

However, early lease termination does require jumping through some extra hoops.

You’ll need to understand your contract terms, verify permissions, and handle finalizing the sale properly to avoid penalties or liability issues down the road.

Step 1: Do I Have Equity in My Lease?

To determine if selling your leased vehicle is worthwhile:

  1. Find the residual value in your contract. This is the value the leasing company estimated for the car at the end of your lease term.
  2. Obtain the current buyout amount. Contact your leasing company to get an exact payoff quote.
  3. Check the car’s market value. Use pricing sites like Edmunds or Kelley Blue Book to see actual sales prices.
  4. Calculate your equity. Subtract the residual value from current market value. Positive equity means potential profit.

For example:

  • Residual Value: $14,000
  • Current Private Party Value: $18,000
  • Equity = $18,000 – $14,000 = $4,000

With $4,000 in positive equity, you could potentially buy out the lease and sell at a profit.

Selling A Leased Car With Negative Equity

If you owe more on your leased car than its current value (negative equity), you have a few options:

1. Buy Out the Lease & Pay Off the Difference

  • Review lease agreement to understand fees and residual value
  • Get financing to cover residual value plus negative equity
  • Once purchased, sell privately to maximize sale profit

2. Roll Negative Equity Into a New Lease

  • Some leases allow rolling negative equity into a new lease
  • Downside is higher payments and potential for overpaying overall

3. Trade-In to Dealer Willing to Absorb Some Negative Equity

  • Dealers may absorb some negative equity to make a sale
  • But you may get less money than private sale
  • May require you to lease or finance another car from them

No matter what, calculate all equity, fees, and payoff amounts first. Explore multiple exit strategies before deciding, as options vary.

Weighing Your Options to Sell a Leased Car With Positive Equity

If you have positive equity, here are the pros and cons of ways to sell your leased car. If you have negative equity in your lease, scroll down a bit further to read your options.

Trade-In To a Dealer

Pros

  • Easiest process logistically
  • Fast transaction time

Cons

  • Lower sale price than a private party
  • Disposition fees may apply

Transfer Lease

Pros

  • Simple exit from lease
  • Someone takes over payments

Cons

  • Potential liability if new lessee defaults
  • Transfer fees may apply

Can You Sell a Leased Car Privately?

Yes, it is possible to sell a leased car to a private party buyer if you follow these steps:

  • Review lease agreement and confirm buyout amount with leasing company.
  • Obtain financing if needed to purchase the car from the leasing company.
  • Once you own it, market to private buyers – this nets the highest sales price.
  • Or, see if your lease allows arranging for a buyer to pay the leasing company directly.
  • Calculate potential profit against residual value and market value.

Pros

  • Highest potential sale price
  • More room for negotiation

Cons

  • More work managing sale
  • May need to purchase car first

When comparing offers, check for any restrictions on third-party sales in your contract and verify options with your leasing company.

Companies That Assist With Selling or Getting Out of Car Leases

If trying to handle selling or ending your lease seems overly complicated, several companies can help:

Online Used Car Retailers

  • Carvana, CarMax, and Vroom will buy out leased cars to add to their used inventory. They handle all payoff logistics.

Lease Transfer Sites

Local New Car Dealers

  • Dealerships often buy leased cars of their make due to tight used inventory. Get quotes from local dealers.

Lease Buyout Facilitators

  • Equityhackr navigates lease company restrictions to facilitate sale without needing to buy out lease first.

Always compare multiple offers. Company services simplify logistics, but may net less profit than private sales. Verify options with your leasing company before using any lease exit company.

Step-by-Step Process to Sell a Leased Car

Once you decide on the best approach, here is how to move forward:

  1. Contact leasing company to discuss selected exit strategy and confirm process details.
  2. Have interested dealer or buyer mail payoff check to leasing company.
  3. Pay any taxes or fees you owe based on your state laws.
  4. Transfer ownership paperwork and release of interest documentation to complete sale.

Be sure to plan timing appropriately around payment clearance and DMV registration deadlines. With some strategic planning, you can sell your leased vehicle to maximize value – just be sure to consult your specific contract terms and verify any questions that arise.

Does Selling a Leased Car Hurt Your Credit?

Selling a leased car does not directly hurt your credit in most cases. However, there are a few scenarios that could negatively impact your score:

  • Defaulting on the lease leads to late fees, potential repossession, and collections damage.
  • Ending your lease early could cause a small temporary dip from closing an active account.
  • Buying out the lease means taking on new debt obligations – critical to manage properly.

As long as you fully commit to the financial responsibilities of buying out and selling your leased car, you can avoid credit damage. Meet all lease obligations and loan payments on time.

Can You Sell a Leased Car to CarMax?

Yes, in most cases you can sell a leased car directly to CarMax. Here is how it works:

  • CarMax will appraise the car and make an offer to buy it.
  • They contact your leasing company to handle the payoff.
  • You provide paperwork to finalize the sale – offers typically good for 7 days.
  • Selling to CarMax is more convenient than buying out lease and reselling yourself.
  • Confirm your leasing company allows third-party sales to CarMax first.

Selling to CarMax avoids sales tax, but may net less profit than private sales. Check lease terms before proceeding.

Can You Sell a Leased Car to Carvana?

Yes, Carvana will buy leased cars, similar to CarMax:

  • Get an offer from Carvana after they appraise your leased vehicle.
  • Carvana pays off the leasing company and handles title transfer.
  • You provide paperwork to finalize sale within 7 days typically.
  • Convenience of Carvana sale may mean lower profit vs private party.
  • Check with your leasing company to confirm they allow sales to third parties like Carvana first.

Key Takeaways

  • Used car values make now a potentially lucrative time to sell a leased vehicle
  • Calculate residual value, buyout price, and market value to assess equity position
  • Weigh options to trade-in, sell privately, or transfer lease when comparing exit strategies
  • Follow key steps to finalize a sale while avoiding penalties or liability
  • Carefully check lease terms for any restrictions before proceeding

Selling an active leased car involves somewhat more complexity than a financed vehicle, but it can be done. With high used car prices persisting for the foreseeable future, assessing your equity and options could lead to a nice payout.

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Steve Momot - Author

Steve Momot - Author

Steve, a seasoned expert in the automotive industry, formerly held a car dealer license in Florida. With extensive experience spanning across car trading and mechanical work, he founded Autohitch. His mission? To guide both buyers and sellers through the intricate maze of car purchasing, ensuring a seamless and informed experience. Outside of the automotive world, Steve has a passion for fishing and capturing the beauty of nature through photography.

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