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Sell your leased car before the lease expires
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I leased my car for 36 months in June 2017 and currently 14 months from my lease. I want to sell the car and lease an SUV.
Details listed below:
- The car is a Honda Accord. The residual value is $ 15,500.
- CarMax pays 16,000 for the car.
- The mileage in the car is 15,000 miles.
- I have to pay my registration fee to DMV in two months (about $ 300).
- I'm currently paying $ 180 a month for the current car.
- I graduated in the summer of 2017, so I can get a $ 500 discount from Honda
My goal is to lease an SUV (Honda CR-V or Mazda CX-5) with a $ 0 deposit (I don't want to pull cash out of my pocket so I just want to use the money I got from selling the Accord) and about $ 200 monthly payment.
Is there any advice? Where should I sell the car? Should I go with CarMax or post it on Craigslist?
- @ JustinCave No this is not right. For example, CarMax will buy your leased car and they'll pay you the difference (in my case, $ 500). Thanks for your comment.
- The residual value is $ 15,500 now, or will it be when your lease ends in 14 months?
- @ Jacob Justin is correct. You don't own the car, so you can't sell it. If you check the ownership papers, the dealer (or the leasing company they work with) is listed as the owner, not you.
After seeing the debate in the comments on selling a leased vehicle at Carmax, I checked the CarMax website:
Are you buying leased cars?
Yes! In most cases, you can sell your leased car in much the same way as any other financed car. We appraise the car, then contact the leasing company for a withdrawal offer and process any equity it may have. Please note that some leasing companies do not allow you to sell the car before the lease expires. Also, be aware that tax savings may not be possible on your leased car. Check with your leasing company for full details.
That means that in some cases they can buy a leased car but have to contact the leasing company. There is no guarantee that they can buy your car or that you will get enough cash to make it worth it. Most of the money is sent to the original leasing company
Your discussions with CarMax must have overlooked an important point.
To end the lease early, you need to buy the car. You'll need to contact the leasing company (or log into your account, presumably Honda Finance) and the Purchase price. This is Not the same as residual value. You can approximate the buyout with this formula:
In your case, your buyout would be approximately: $ 15,500 + (14 * $ 180) = $ 18,020. Note that it may be a little less due to an interest rate adjustment.
If you sell the car to CarMax for $ 16,000, you will need to raise an additional $ 2,000 to get out of the lease. (You will not receive a check for $ 500.)
- Most buyout prices do not include the remaining 14 months of interest on those $ 180 payments. Depending on the loan, if there is $ 2500 left, half of that could be interest and only half could be principal, which would be the buyout payment. Unless there is a clause preventing this, what fees or no buyout.
As Justin Cave says, you can't sell a car that you lease because you don't own it. Yes, CarMax will buy a leased car, but they won't buy it from youYou buy it from the company you lease it from. There is a lot of paperwork and negotiation involved, which means a lot of people are making a cut, and it means that a casual person off the street is unlikely to be able, or even willing, to deal with it. So, if you don't believe anyone in the auto industry will see your craiglist ad, this is not a good way to do so (and ethically speaking, make it clear in the ad that you are not the owner of the car). If you do, you should check out different vendors to see who offers you the best deal. However, the complexity of this offering means there won't be a lot of competition for your business, as I previously said there will be a lot of transaction costs. You should also reach out to the company you are leasing from and see if they are ready to beat CarMax's offering.
While Pete B.'s answer was pretty rude, they make a few key points. You are giving up the little equity you built up in your current car to take on a significant liability and have expressed a desire to avoid current cash payments in favor of future payments, a strategy that generally results in high interest payments. Getting a new car every two years is quite a financial outlay. The only bright spot is that the cars you mention are on the low end of the cost.
- It's not difficult and there are no negotiations. There are no people who make a cut. It is essentially the same as having a car with a loan. The buyer calls the finance company and receives the withdrawal amount and address. After verifying that the sale price is greater than the withdrawal amount, the buyer sends a cashier's check or wire transfer to the financial firm with the full sale price. The finance company sends the buyer a unique title and the seller a check for the amount that is greater than the payout value.
A leased car can be sold at any time as there is a buyout. I run a dealership so I know how it works. Some cars have equity, depending on the mileage, others have negative equity. In this case you have to pay the difference. Carmax can buy a leased car and no, when you have 14 payments left you will need to make those payments. People don't make their point if they don't know what you're talking about.
One thing I like about your question is that you clearly state your goal. It's refreshing that your goal is to drive a specific collection of cars and you give up everyone pretending to make wise financial decisions. It's nice to see a new graduate find he is killing himself financially by renting new cars.
If I was in your shoes and had your goals, I would go to some Honda and Mazda dealerships and see if they can close deals that match your criteria. Of course you can try CarMax, but I think you'd better pit the dealerships against each other. Depending on how well you negotiate and what priorities you set, how close you are to the specified parameters.
Okay guys. I just saw that question again and here is my answer from my research.
The short answer is: yes, you can sell your leased car to CARMAX before it is due.
But here are some thoughts:
1) It is better if your car has low mileage. In my case, my car had 16,000 miles after 24 months.
2) Carmax gives you an approximation for your car that is usually less than the money you have to pay the dealership.
3) Using this, you don't have to pay the extra money that you have to pay when you return your car to the dealer (in my case $ 400, Honda).
I hope you find this useful
- Subject: # 3, in my experience there is no reason to involve the dealer in the purchase of your rental agreement. They wanted to charge me an additional $ 1k for the privilege of what the financial branch that actually owns the lease wanted. Their only justification was, "Since we are not keeping the lease, we have to buy the car from the leasing company and then sell it to you." At least they were honest about their role as the (practically useless in my opinion) middleman in the process.
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