Guide
How to sell a leased car
You cannot sell a car you do not own, and on a lease the finance company owns it. So a lease sale is really two transactions: you buy the car, then you sell it. Whether that is worth doing comes down to one subtraction.
You buy the car
From the finance company, at the buyout price
Plus the tax on it
A purchase is usually taxed. Ask your state
The title comes to you
Not instantly. Weeks, sometimes
Then you sell it
An ordinary private sale from here on
The idea
A lease is a long rental with a price to keep it at the end.
That price was fixed when you signed, based on a guess about what the car would be worth years later. Everything here follows from whether that guess turned out low.
When the lease was written, somebody estimated what the car would be worth at the end of the term. That estimate is the residual value, and your monthly payment was built around the difference between the price then and the residual now. The contract also gives you the right to buy the car, usually at that residual plus fees, and during the term at a payoff figure that includes what is left of the balance.
Used car values do not follow contracts. When they rise faster than the residual assumed, the car is worth more than your buyout price, and that difference is yours to take if you want it. When they fall, the residual is above the market and handing the car back at the end is the finance company’s problem rather than yours, which is one of the genuine advantages of a lease.
So the whole question is a subtraction: what the car is worth, minus what it costs you to own it. Everything else on this page is about getting those two numbers right and finding out whether your lender will let you act on them.
Four numbers
Four numbers to get first.
All four are obtainable in an afternoon, and three of them are free.
The buyout price, from the lender
Ask for a payoff quote in writing, and ask how long it is valid. During the term it includes the remaining balance; at the end it is normally the residual plus a purchase fee. This is a number from your finance company and not from your monthly statement.
What the car is actually worth
What comparable cars near you are selling for, adjusted honestly for mileage and condition. Mileage matters more here than usual, because leases carry mileage limits and a car well over its allowance is worth less and would have cost you a penalty anyway.
The tax on the buyout
Buying the car out is a purchase, and most states tax a purchase. The amount and whether any of it comes back to you on the onward sale are state questions. This is the line that most often turns an apparently profitable buyout into a break even one.
What you would owe if you just handed it back
Excess mileage, wear and tear charges, a disposition fee. If those are substantial, buying the car out and selling it can be worth doing even when the equity looks thin, because you avoid them.
The method for the second number is in how to price a used car. Do that first, because it decides whether the other three are worth chasing.
Three routes
What you can do with the equity, if there is any.
They differ in how much work you do and how much of the difference you keep.
Buy it out, then sell it privately
You pay the buyout and the tax, the title comes to you, and from that point it is an ordinary private sale. It keeps the whole difference and it needs the money for the buyout up front, which is the practical obstacle for most people.
Sell it to a dealer or online buyer
Where your lender permits it, a third party pays off the lease and gives you the difference. No money up front and no listing. Whether it is available to you is the question in the next section, and it is not a question you can answer from an article.
Hand it back
If the buyout is above what the car is worth, this is usually the right answer and it is what the lease was for. Check the return condition standards well before the date, because that is where the avoidable charges are.
The catch
Your finance company decides what is available.
Programmes here have changed in recent years, which is why another driver’s experience is not evidence about your contract.
Some finance companies are happy for anybody to pay off a lease. Some allow it only through dealers of the same brand. Some permit no third party buyout at all, which means the only person who can buy the car is you, and if you cannot fund the buyout there is no equity to take.
Several large lenders changed their position on this within the last few years, in both directions, and the rules can differ between brands owned by the same company. That is why the answer here is not a list: any list would be wrong somewhere, and being wrong on this particular point costs somebody a plan they had already made.
So the first call is to your own finance company, with your own account, and the questions are short. May somebody other than me pay this off. May a dealer. If so, which ones. How long is a payoff quote good for. What is the purchase fee. Get the answers before you get as far as pricing the car for a buyer.
If you buy it out
What changes about the sale, and what does not.
Once the title is in your name it is an ordinary private sale, with three differences worth knowing.
The title takes time to arrive
The finance company processes the buyout and the state issues a title in your name, and that is not instant. Do not promise a buyer a date until you have the document, because a sale arranged around an estimate is the version that goes wrong.
You are now the seller, with everything that means
The car is sold by you, as is, with your name on the paperwork. Whatever the lease said about wear and tear no longer applies to anybody: the buyer is looking at the car as it is, and your listing should say what that includes.
The service history is a real asset here
Leased cars are often maintained on schedule and have the records to prove it, which is exactly the evidence a private buyer pays for. Gather it before you list, because it may be the strongest thing about the car.
Do the whole thing in one sitting if you can
Where the lender has a branch, buying out and selling on the same day in the same place removes the window in which you own a car you did not want to own. Where they do not, expect a gap of days or weeks and plan for it.
Read next
Once the title is yours.
From that point, it is an ordinary private sale.
A buyout puts the car in your name, and what that registration and title transfer costs, including any sales tax on the buyout itself, is set by your state rather than by the finance company. USA.gov lists the motor vehicle agency for every state. Work that number out before you decide the buyout is worth doing.
The whole process, in order: how to sell a car privately.
How to sell a car that does not run
A car that will not start still has three kinds of buyer and a real price. What to find out first, what to disclose, and how the handover works without a test drive.
What it costs to list a car for sale
What the main places actually charge a private seller, read off their own pages and dated, and why the headline listing fee is rarely the number that matters.
How to price a used car for a private sale
How to arrive at an asking price you can defend: three sources, an honest condition grade, the room to negotiate, and when a silent listing means the number is wrong.
Frequently asked questions
Can you sell a leased car?
Not directly, because you do not own it: the finance company does. What you can do is buy it out and then sell it, which is an ordinary private sale once the title is in your name. Whether that is worth doing depends on the buyout price against what the car is worth.
What is a lease buyout?
Buying the car from the finance company for a price set out in your lease agreement. During the term it is usually the remaining balance plus the residual value and any fees; at the end it is normally the residual value the contract fixed at the start. The exact figure and how long the quote lasts come from your lender.
Is there equity in my lease?
There is if the car is worth more than the buyout price, and that happens when used values have risen faster than the contract assumed. Work it out by getting the payoff quote from your lender and comparing it against what comparable cars are actually selling for. If the car is worth less than the buyout, there is no equity and handing it back at the end is usually the sensible move.
Can a dealer or an online buyer buy out my lease directly?
Sometimes, and it depends entirely on your finance company. Some allow a third party to pay off the lease, some allow it only through their own brand's dealers, and some do not allow it at all. Several large lenders changed their position on this in recent years, so the only reliable answer is the one your lender gives you now.
Do I pay sales tax if I buy out my lease and sell the car?
Often yes, because buying the car out is a purchase, and a purchase is usually taxed. How much and whether any of it is credited depends on your state, and it can be the difference between the deal being worth doing and not. Confirm it before you commit to anything.
The service records, where a buyer can see them.
That is worth more to a private buyer than to anybody else, and a page is where the evidence goes. 10 days free.