If you find yourself nearing the end of your lease agreement or are interested in terminating it early, you may be curious if it’s possible to trade a leased car to another dealership.
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A typical lease agreement is established between you and the dealership. The agreement enables you to rent a vehicle for a fixed period at a predetermined monthly rate. You must return the leased vehicle to the dealership at the end of the lease agreement.
However, if you’re not ready to part ways with your car, you may have the option to purchase the lease. In some situations, an alternate dealership may be able to buy your lease, but that is contingent on the specifics outlined in your lease agreement.
Can Another Dealership Buy Out My Lease?
Dealerships may buy out your lease depending on your original lease agreement. When you lease a vehicle, the dealership or bank technically owns it, but many dealerships will let you trade it for the right sale price.
However, whether you can sell the lease to another dealership depends on the company and the terms of your lease agreement. Some car manufacturers, like Audi Financial, Acura Financial, BMW Financial Services, and Ford Credit, may have partial or complete restrictions for third-party buyouts. Brands such as GM Financial and Honda are also included in the list that only allows you to sell your lease to people within their brand.
Due to supply chain disruptions and microchip shortages, fewer dealerships currently permit third-party companies to sell your leased vehicle to another dealership at the end of the lease period. The high prices for new car purchases and leases have resulted in a shortage of vehicle supplies. Demand is outpacing supply, so most dealerships are not interested in selling to another dealership.
However, other options remain available even if your leaseholder does not permit third-party buyouts.
What Happens At The End Of A Lease?
When your lease is coming to an end, you will have the following options available to you:
- One of these options is to buy the vehicle, which most dealerships will allow you to do. If you decide to do this, you can get a lease buyout loan to pay for the car at its residual value, which is how much it is worth at the end of the lease.
- Alternatively, you can return the lease to the dealership. However, it’s best to remember that the dealer may impose fees for excess wear and tear on the vehicle or for exceeding the mileage limit.
- Another option is to allow another dealership to buy out the lease. This possibility varies from lender to lender, so you must check with your specific company to see if this is an option.
Your lease contract will determine which options are available to you when your lease ends. Additionally, the vehicle’s residual value will impact how much you need to pay if you buy it. Some lenders may offer the option to buy out the lease before the end of the lease period, so it’s always a good idea to contact your leaseholder to ask about the specifics of your situation and to request the lease buyout amount.
What Are The Reasons To Request A Dealership Lease Buyout?
If you wish to lease or purchase a new vehicle, consider asking another dealership to buy out your lease. This will free up your monthly payment and allow you to change your car. Additionally, if you have equity in your lease, you can sell it to a third-party dealership and use the proceeds to buy a new vehicle.
Positive equity is the difference between the lease’s residual value and the vehicle’s market value. If you have positive equity at the end of your lease, you can significantly reduce the cost of purchasing another car by allowing another dealer to buy out your lease.
Suppose you struggle to make your monthly payments. In that case, your leaseholder may offer financial restructuring programs to make your lease more affordable, even if your lease contract does not permit another dealership to buy out your lease.
What Are Some Lease Buyout Considerations That Are Important To Have In Mind?
Just because another dealership offers to buy out your lease doesn’t automatically mean it’s the wisest financial move. Consider these important factors before deciding to trade in your lease:
Assess the Lease’s Value
Before making a decision, determine the worth of your vehicle. Use tools like Kelley Blue Book or Edmund’s Appraisal to gauge its market value. Then, compare it with the residual value stated in your lease documents or provided by your leaseholder. Buying out your lease might be beneficial if the appraisal value exceeds the residual value. However, if the appraisal falls short, there may be better choices financially.
Expect Changes in Lease Terms
Consider alterations in your lease terms if you return the vehicle to the original dealer or opt for a third-party buyout. Ending the original contract means you’ll negotiate new terms, which could result in different leasing or financing conditions. Credit score changes or vehicle price fluctuations can influence interest rates and monthly payments.
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Address Negative Equity
Negative equity, where you owe more on the lease than the car’s market value, poses challenges. This situation often arises due to paying above market value, unfavorable interest rates, or additional fees. Finding a dealer willing to handle negative equity buyouts can be difficult.
If the market value is lower than the residual value, consider returning the car to the dealership or negotiating for better terms. Rebates and dealership incentives can help mitigate negative equity, but be cautious about rolling it into a new loan, as it could significantly increase monthly payments.
Consider Leaseholder Rates
Leaseholders permitting third-party buyouts may charge dealerships higher rates than your buyout amount. In such cases, buying out the lease independently might be more advantageous before trading it in or selling it to the dealership. However, this process entails obtaining financing, paying state sales tax, and completing registration and titling procedures before selling to the dealership.
How To Request A Dealership Buyout?
If you determine that having a third-party dealer buy out your lease is the most financially advantageous option and your contract permits it, adhere to the following steps:
- Review your lease contract: Your lease agreement is between you and the financial institution or credit union that financed your vehicle. You must consider alternative solutions if your contract prohibits third-party buyouts.
- Determine your car’s residual value: Calculate your vehicle’s residual value by referring to your lease contract.
- Contact dealerships: Even if your leaseholder permits third-party buyouts, you must find a dealership willing to facilitate the process. Reach out to three or four dealerships to inquire about lease buyouts.
- Request a lease buyout price from your leaseholder: Contact your dealer and request a lease buyout quote. Communicate that a third party intends to buy out your lease, as this may influence the price provided.
Is It Possible To Transfer A Leased Car To Another Person’s Name?
Lease transferability varies among leasing companies and contracts. Some may allow lease assumption or transfer to another individual, while others may not permit it. Understanding the terms of your lease agreement is crucial in determining if transferring a lease is an option.
What Are The Implications Of Terminating A Lease Early?
Early lease termination typically incurs penalties or fees, including paying the remaining lease payments, early termination charges, and potential depreciation costs. Terminating a lease prematurely may also affect your credit score and future leasing or purchasing opportunities.
Can You Negotiate The Buyout Price Of A Leased Vehicle?
Negotiating the buyout price of a leased vehicle is possible in some cases. Market conditions, residual value, and the lessor’s policies may influence the negotiation process. Research comparable vehicle prices and discuss with the lessor to potentially lower the buyout amount.
Are There Tax Implications Associated With Lease Buyouts?
Tax implications of lease buyouts vary based on local tax laws and individual circumstances. In some regions, buying out a lease may be subject to sales tax or other applicable taxes. Consulting with a tax professional or financial advisor can clarify the tax implications of lease buyouts in your situation.
What Options Are Available If I Exceed The Mileage Limit On My Leased Vehicle?
Exceeding the mileage limit on a leased vehicle may result in additional charges at the end of the lease term. However, some leasing companies offer options to mitigate excess mileage fees, such as purchasing additional miles upfront or negotiating a mileage overage fee. Understanding your lease agreement’s terms regarding mileage limits and potential remedies is essential in managing this situation.
Upgrade Your Lease Experience With Capital Motor Cars
At Capital Motor Cars, we understand the complexities of leasing and the importance of informed decision-making. Whether you’re considering trading in your leased vehicle, exploring buyout options, or seeking expert advice on lease management, our team is here to help.
With our commitment to transparency, flexibility, and customer satisfaction, we aim to elevate your leasing experience. Contact us today to discover personalized solutions tailored to your needs. Let Capital Motor Cars be your trusted partner in navigating the world of automotive leasing.