Monday, July 01, 2019
Should You Exercise Your Option to Buy Your Leased Car?
The best thing about making this decision is that you’re holding the best hand in the card game between you, the leasing company, and the dealer. That’s because you know your car better than they do. You’ve probably been driving it for close to three years, you know how well you’ve maintained it, how worn the tires are, whether it’s been wrecked and repaired, and how many dings, dents, or upholstery stains there are. You know if it was garaged, how carefully you drove it and the exact mileage. You also know, better than anybody, how well it runs. All these things determine the value of your car.
Unless you buy a new car, you can’t have as much confidence in any other used car that you buy as your own used leased car. The only assurance that you have when you buy somebody else’s used car is their word, or the dealer’s word, about how it was driven and maintained. A CarFax report offers good information, but it’s not 100% reliable. That means if you did take very good care of your leased car, drove it carefully, kept it in a garage, waxed and washed it faithfully, maintained it carefully and didn’t put too many miles on it, it’s worth more to you than anybody else. That’s because you’re the only one who knows that. And you can never be sure about that for any other used car you might buy.
Given that you like your leased car and want to keep it, the next step is determining the current wholesale market value for your car. Car dealers call this the “ACV”, for actual cash value. Check the Internet for information on the value of your car. The best check on the wholesale value is to drive your car to 3 or 4 car dealerships that are franchised for your make. If you drive a Ford, visit as many Ford dealerships as you can and tell them you want to sell your car. You aren’t misleading them because it’s a lease car. You could exercise your option to buy it from the leasing company and then resell it to the dealer, if the dealer’s offer was higher. If you live near a CarMax store, the largest retailer of used cars anywhere, they buy a lot of used cars “over the curb” and their prices are often competitive. Be sure you get a quote from them. Two other sources for an accurate wholesale market value of your car are www.Carvana.com and www.WeBuyAnyCar.com. You can get an online estimate from each of these companies and they will also give you a firm cash offer when they see your car.
Now that you’re armed with the actual market value for your car, you can compare it with the residual value in your lease contract, the price you have an option to buy it for. You might get lucky and be able to sell your car to a dealer, www.WeBuyAnyCar.com, CarMax, or www.Carvana.com for more than your option price. If so, you can flip the car for a fast profit. It’s not unheard of to make $1,000 or more by doing this. If you want to keep your leased car, you should be sure that your option price is less than, or very close to the true wholesale market value. If not, you’re better off to give the leased car back to the leasing company and buy similar used car at a lower price. Car dealers, of course, mark up the wholesale value of their used cars by anywhere from $1,000 to $4,000+, so even if your option price is $1,000 or so above actual wholesale, it can still be good buy. Remember, you know that used car better than anybody and if you buy another used car, you don’t.