Is there hidden cash parked right in your driveway?
If you’ve got a car lease that’s set to expire in a few months, a red-hot used car market means you need to pay extra close attention to the value of your vehicle.
You might want to make a move more quickly than you’d expect — and you might not necessarily want to opt for just returning the car to the dealer when the lease ends.
Used car values skyrocketed as a result of the twists and turns in the economy during the pandemic, particularly for some high-end trucks. Essentially, a shortage of new cars — thanks to cuts in production in the early days of the coronavirus — drove up the values of used cars.
Your car or truck could be worth more than the buyout price that’s listed on your lease agreement, according to Ivan Drury, senior manager of insights at Edmunds.
And if it is, you might make more money by trying to sell or trade in that vehicle yourself.
Granted, this is one of those strategies that won’t work for everyone. It’s also likely that it won’t make sense as dealers rebuild their inventories of both new and used cars in the months ahead.
In some cases, you might even be better off buying the vehicle at the end of your lease and keeping it, if the miles and condition of your car are well beyond what’s allowed in the lease contract and you’d owe a large amount of money for excessive wear and tear.
About 4.2 million drivers leased cars, trucks or SUVs in 2017, according to Edmunds data, and most of those leases expire in 2020.
Many consumers opted to extend their lease a bit in 2020 due to the pandemic because health-related shutdowns hit various states and temporarily closed some dealerships.
More drivers than usual could be dealing with an expiring lease now through December.
Is your leased car worth more than you’d imagine?
One odd thing about 2020 is you might have put on far fewer miles than expected in the past six months because you’ve been working from home or are now unemployed or furloughed.
And your car or truck might not have depreciated in value as much in the past year because used car values skyrocketed during the pandemic.
New cars were in shorter supply once auto production stopped temporarily. Rental car companies that faced a financial crunch weren’t buying fleets of new cars and putting their old vehicles up for sale earlier this year, either.
“It’s the most unique used-car situation we’ve ever seen,” Drury said. Some cars, he said, didn’t depreciate in value for almost an entire year.
Much depends on the popularity and availability of the type of car or truck that you’re leasing, as well as how many more months you have to go in a lease.
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