You Could Make Thousands of Dollars Buying Out Your Car Lease in 2022

Find out if it makes financial sense to buy out your leased vehicle rather than returning it to the dealer.

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Imagine getting free money with the stroke of a pen. That’s what many fortunate people who started leasing their cars during 2019 are finding out now that their agreements are coming due. Thanks to the huge run-up in used car prices, they can buy out the lease for the residual value, sell the vehicle themselves, and pocket the difference, which can be thousands of dollars.

According to the Manheim Market Report, the average used vehicle is worth nearly 25% more than just a year ago in March 2021. That’s in addition to the 26% increase the previous year. This 50%-plus rise in used car prices from 2020 to 2022 is officially more than four times the inflation rate during the same period.

If you have a lease that’s due to end soon, here are some answers to questions you may have to help you decide if it makes financial sense to buy out your leased car rather than return it to the dealer.

Should I Buy Out My Car Lease?

Let's first assume you are at the end of your lease with no payments left. The first step is to check with your leasing company or in the documents you originally signed to make sure you have the right to buy out your lease.

Next, determine the residual value of the vehicle (an estimate of how much your car is worth once the lease contract is up). You can find that in your lease contract.

Then estimate the value of your car as a private party sale. Kelley Blue Book has a My Car's Value feature that you can use to get a good sense of what your vehicle is worth.

If the actual value is higher than the residual value, you might be able to make money by buying out your lease then reselling your car. Don't forget to subtract your state taxes and any tag, title, and registration costs you’ll have to pay. A call to your Department of Motor Vehicles or the neighborhood tag and title office can help you get those exact numbers.

If you're not at the end of your lease and want to pay it off early, contact your leasing company, and they should be able to provide you with the exact amount. Then use that value in place of the residual value to calculate your potential profit.

Will I Make Money If I Buy Out My Lease?

I recently surveyed my Facebook friends who had bought out their leases. Some reported making as much as $10,000 or $11,000 by buying the luxury vehicles they leased in 2018 and 2019 and then reselling them. Late-model used cars (2015 and newer) are worth thousands more now than they were three years ago, which is another reason so few off-lease used vehicles are available at dealership lots.

In the fourth quarter of 2021, GM Financial—the financing arm of General Motors—reported its U.S. lease returns had dropped to just 1%, down from 62% during the same period a year ago. That isn’t just a large drop. It’s a cliff dive that’s driving high used-car prices right now.

With rare exceptions, selling the car yourself and pocketing the profit or just keeping it and avoiding today’s sky-high used car prices can be the right financial move.

What If I Already Own a Vehicle and I Want to Sell It?

As a car dealer, I can offer you a specific example of the retail market in the spring of 2019 and the one we have right now.

I sold a 2015 Toyota Prius with only 23,817 miles on it in March 2019 for just $16,350. This was back when gas prices were low and before the COVID pandemic. Today, that exact vehicle with the same mileage and features would have a retail value of $25,800, according to the Manheim Market Report. That’s a near $9,500 jump in value over three years.

If you have an extra car or are leasing a vehicle, the absurdly high prices of today’s used car market may help you get a pile of cash once you own it outright.

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Steven Lang
Steven Lang is a special contributor to Capital One with nearly two decades of experience as an auto auctioneer, car dealer, and part owner of an auto auction. Some of the best-known auto publications turn to him for his expert insight. He is also the co-developer of the Long-Term Quality Index, a survey of vehicle reliability featuring over two million vehicles that have been inspected by professional mechanics.