Here is the fast and easy way to turn in your lease car and get a new lease car

I see this kind of tweet all the time:

Andrey… I feel your pain.

I was once in your shoes a few years ago. Then I decided that enough was enough – and would figure out the leasing game in our favor.

And in the Winter of 2016, I created a system that takes all the hassle out of trading in a leased car for a new lease.

I call it the K.T.L. At-home Leasing System. It works in most of America (the lower 48). And the best part is we do everything from our home, office – even a Starbucks.

The most important rule is to NEVER, EVER visit a car dealership. This is a FATAL mistake. Because doing so will waste up to 5 hours of our time. Even worse, we will overpay for our lease by at least $6,000 (up to $12,000.00).

Instead, I reveal how to force all automakers to lease us a car over the Internet. Yep – we never even see a car salesperson.

And yes… my same systems force the leasing company to pick up our end-of-lease vehicle sitting in our driveway. They will gladly do it. We just have to ask in the right way. I show you how.

This is why I created this blog. I expose the auto industry – all their games, tricks and hustles. And instead of dreading car leasing, I reveal how to make it a pleasure.

With that said:

I HIGHLY recommend looking through the most popular posts on my blog – start here.

Car lease is up – now what?

There is a dirty little secret in the car industry that hides one of the most powerful end-of-lease options for us.

Just about every car leasing company is SUPER excited to help us once our lease is over.

About 90 days before our lease ends, they suggest we research our options.

They always give us these 3 end-of-lease options:

car lease is up GM turn in guide

1) Trade in our leased car for another leased car…
2) Purchased our own leased car…
3) Walk away from the lease and turn our car in.

Option #1: Trade our leased car in for a new leased car

Car dealerships will do everything in their power to steer us into option #1. They want us to turn in our car AND lease a new car from them.

The reason why is simple economics. This is how dealerships make TONS of cash.

First, they will exploit the option to buy out our lease when we turn it in. Because the “Purchase Option at End of Lease Term” is almost always thousands of dollars less than market value.

Even better, off-lease cars are usually in perfect shape. Dealerships know we fear damage penalties and over-the-mileage fees. As a result, we turn in our cars in (usually) flawless condition. So car dealers resell our off-lease cars with a minimal investment – a good detailing and cheap new tires.

In the end:

These car dealers buy our end-of-lease car and flip it on their lot for thousands and thousands in easy profit.

Plus:

Car dealers make thousands of dollars more selling us financing, extended warranties – even life insurance.

But here is the best part of a lease turn in – for the dealership:

We will probably get a terrible new lease deal.

Sure, leasing seems great because of the advertised lower monthly payment.

But:

Car dealers almost never discount the cost of a car. They lease us a new car at the full MSRP sticker price.

We let them get away with this, because we think we have to. We assume that leasing a car does not entitle us to a discounted price. (This is a whopper of a lie. And I have a system that reveals how to get car leases at the absolute lowest price here.)

When car dealers lease us a car at the full MSRP sticker price, they bank at least $4,000.00 in pure profit (or a lot more)…

Also:

The interest we pay to borrow money on the lease (a.k.a. the “Rent Charge“) is at least $2,000.00 higher than it should be (usually a lot more)…

Even worse:

We are charged full price for every “fee” imaginable – adding another $1,000.00 (or more) to their bottom line.

In the end, car dealerships walk away with well over $10,000.00 in pure profit when we turn in our car AND lease a new car.

This is the REAL reason for the big push to get us into leasing a new car.

Option #2: Buying our off-lease car

Every financial guru on the planet tells us that buying a slightly used car makes the best financial sense.

And up until just a few years ago, this was solid financial advice.

But nowadays, this is outdated information.

Why?

Because cars are no longer made like they used to be. And this is mostly good news…

Car manufacturers have pledged to have zero deaths by the year 2020. That is just a few years away. And they have loaded the cars we drive with a dizzying array of safety equipment. This includes expensive airbag systems and complicated computerized safety sensors…

But:

When these safety systems malfunction, they are super expensive to fix.

And of course, they are designed to fail after the warranty expires via “planned obsolescence”:

Even worse:

The fine print in warranty agreements protects insurance companies against claims on these expensive failures.

And even if our 3-year old car does not break down, it costs a fortune to maintain starting just after our lease ends.

See how the cost of maintenance jumps on the most popular cars sold in the USA once a 3-year lease ends:

Subaru Outback
total cost ownership Subaru Outback

Subaru Impreza
total cost ownership Subaru Impreza

GMC Terrain
total cost ownership GMC Terrain

Volkswagen Jetta
total cost ownership Volkswagen Jetta

Ford Mustang
total cost ownership Ford Mustang

Volvo XC90:
total cost ownership Volvo XC90

Mini Countryman
total cost ownership Mini Countryman

BMW 3 Series
total cost ownership BMW 3 Series

I could go on and on…

And:

It gets even worse for hybrids and all-electric vehicles

These cars have super expensive battery packs that are certain to fail just as our lease ends. Even though car manufacturers guarantee them for up to 100,000 miles, they almost never honor their electric-pack warranties.

Of course, we all know one of the biggest benefits of leasing is that we are always driving a new car that is usually super reliable and under warranty.

On the flip side:

We all know cars nickel and dime us about 3 years in – just as our lease ends. This is when expensive stuff breaks down and is out of warranty.

So, option #2 is a bad choice to take.

Option #3: Turn in the keys and walk away

Dealerships HATE, HATE and HATE this option.

And I find when dealerships hate something, it is good for us.

Since I sell a lot of DIY leasing kits, I get to see a ton of lease agreements, lease worksheets and end-of-lease situations…

And from everything I have seen, turning in our keys and walking away from a lease is almost always the best option to take.

Even if we have some damage.

Even if we are a little bit over the mileage allotment.

It is WAY cheaper to walk away from a lease and pay a few hundred dollars in damages and over-the-mileage penalties.

Whenever my cars come off lease, here is exactly what I do:

First, I use my DIY leasing system and get the best price on a new car – always $0 cash down.

Next, I plan ahead on turning my existing lease in…

Schedule 2 end-of-lease inspections

If available, I schedule my first end-of-lease inspection about 40 days before my lease ends. (I mark this in my calendar so I do not forget.)

And I arrange to have the inspection at my home (or office). We get this convenience at no extra charge because of the disposition fee we paid when we first leased our car.

I always hang out with these inspectors during the inspection. This keeps ’em honest.

On the flip side, having an end-of-lease inspection done at the dealership is a license to steal. They will have a field day and report all sorts of damage we may (or may not) have. By the way: end-of-lease inspections are outsourced and not performed by the dealership.

By starting the process earlier than recommended, we are sure to get our initial inspection report well before our lease ends.

Why is this important?

Because, we get the option to fix repairs cheaper with our own sources than what the leasing company is going to charge us. This is especially true with dents, tire replacement, cracked windshields and curb rash.

Here is what an actual lease return checklist looks like:

lease return checklist

Wear and tear surprises

Many people are under the wrong impression that a lease car must keep its new appearance at lease end.

This is not true.

Our lease agreement allows us “normal wear and tear.”

Most leases allow us:

– Exterior body panel dings, dents and scratches – fewer than 3 “dings” per panel (a ding is the size of a quarter or smaller, without broken paint)…

– Chips, scratches, dents, and gouges smaller than 2 inches on bumpers or panels…

– Single windshield chip without spidering…

– Scratches and gouges up to 6 inches on wheels…

– Scratches and scuffs on lenses (headlights, taillights and markers)…

– Interior burn holes – up to 2 per panel with a diameter up to 1/8 inch…

– Interior permanent stains – 1 per panel up to 1/2 inch…

– Interior cuts and tears – up to 2 per panel up to 1/2 inch…

– Minor staining and carpet wear…

– All four tires and the spare have more than 1/8 of an inch of tread at the shallowest point. (Heck, some leasing companies allow us to turn in our car with bald tires – as long as metal treads do not show through).

If we have chargeable damages and/or over the mileage fees, we will get billed for it via a Turn-In Settlement Invoice. And we usually get at least 30 days to satisfy this bill.

It might not be as bad as we fear

Some are pleasantly surprised and have very little in the way of reportable damages.

Others get worse news than expected.

It all depends on the leasing companies guidelines and the mood of their inspector. Either way, getting a first inspection report well ahead of the last lease day helps us lower the damage amount.

Getting the damage report early allows us to hedge the cost of damages…

Because:

Often, we can have our own local car pros lower the cost of repairing damages:

Paintless Dent Removal (PDR) services often “pop out” dents in minutes. And this service costs about a third of what an expensive collision shop would charge.

“Curb rash” (when we scrape our tire’s rims against a curb) can be reconditioned for about $125 each – usually 50% less than the quoted price.

Detail shops can work minor miracles on scratches. I once saw a long scratch on a Mercedes-Benz repaired like new for $250.

Windshield chips are usually covered FREE by our auto insurance policy – with zero deductible. If a windshield has a spider crack, it needs to be replaced. It probably makes sense to pay the $100 insurance deductible and get it fixed on our own.

If tires are bald, we can get ’em replaced with a set of cheap new tires. However, they must be all the same tires – not mismatched.

If there are small nicks and paint chips on our vehicle, I buy a small bottle of exact matching touch-up paint from the dealership’s parts department. I throw out the brush that comes in the touch-up pain bottle and use this thin-bristle brush instead.

Where do we find these local services?

I ask my dealership service contact for recommendations. They gladly pass along contact information as a service for their customers.

And I always keep receipts so I can document my repairs.

Once the repairs are complete, we ask the leasing company to schedule a second, final inspection. The inspector will check our vehicle over again and verify that the repairs were done properly.

Lease extensions

According to Toyota Financial Services, 1 out of every 10 of their lease customers extends their lease up to an extra 5 to 6 months.

This allows us to keep the current rate on our lease and give us extra time to consider our lease-end options.

If we have never missed a payment, odds are good we will be approved for an extension. Even better, there is (usually) no extra cost to get one.

Do not forget these when turning in a leased vehicle

Make sure to bring with you:

– A copy of your lease agreement…

– All keys, keyless entry fobs and any other additions associated with your leased vehicle…

– All vehicle documents received at the time of delivery including the owner’s and maintenance manuals…

Remove any garage door remotes and toll tags.

FAQs

I often get the same questions about end-of-lease options. Here are my answers:

“Do I have to return my car to the original dealer I got the car from?”
The vehicle can be returned to any dealer of the same brand.

“If I lease a vehicle and have equity at end of lease, can I turn in the car and get a check from the dealer for the equity?”
Maybe – scratch that. Not anymore. Flipping an end-of-lease car died late in the year 2017. I explain why here.

“If I go over my mileage (say by 2 or 3,000 miles) or I have a few extra scratches or dings in the car… can I better leverage the dealer to not charge me for these items in the event I buy or lease another vehicle from them?”
Absolutely. A desperate or aggressive car dealer might “eat” lease damage or over-the-mileage penalties to get another sale…

I recommend the following tutorials in this situation:

Are lease pull ahead programs worth it?
Is turning in a leased car early for another lease worth it?

“I understand Ford leases are different with end-of-lease requirements. Is this true?”
Yes, it is true…

Ford (a.k.a. FMC Credit) requires we let them know 90 days in advance of the vehicle’s lease end if we plan to buy the vehicle, or trade it in. It takes a little advance planning with a Ford lease.

“I have about 90 days left on the lease of my 2012 Lexus IS 250. I am about 6k miles under. I leased in California, but now live in Texas. Do you know if there is any penalty for the out of state return.”
There is no penalty for turning it in out of state. We can return our end-of-lease vehicle to any dealership of the same brand.

“My car was also in a wreck, it was repaired by an approved Lexus body shop. Will this count against me?”
I have good news for you: there is no penalty for the wreck.

“One thing the Hyundai salesman mentioned is that if we decide to trade-in the lease (at the end of the lease) for another lease we would NOT owe any mile overages. Is that true? He said that it’s common in leases. He was adamant about it as we were making sure that we would not owe the 0.20 per mile if we went over 10,000 after the 3 years – which we will.”
Technically what he says is true, if you trade, there is no mileage penalty.

But:

I would NEVER trade in a lease until you read this first.

“I had damage to my leased car. I did go through my insurance and received a check that I have been sitting on, for when I turn in the car. My question is should I have the hail dent fixed and other imperfections? or wait to talk to the dealer at trade in.”
I would get a lease-end inspection and see what the damages are. The damage might not be noticed (or considered chargeable).

But:

If the end-of-lease hail damage amount is more than your insurance check, you might get a quote from a Paintless Dent Removal company – it will probably be cheaper (and you get to keep the difference).

“I have been affected by an emergency and suffered a hardship. What are my options?”
Most leasing companies will allow qualified customers to delay one or two monthly payments, resuming their regular payment schedules when their situations improve.

(A “qualified” customer is typically one that makes regular, on-time payments.)

“Do I have to do anything with my license plates after I turn in my vehicle?”
If you live in the state of Connecticut, Maine, North Carolina, Rhode Island or Virginia, you are required to provide proof of cancellation or transfer to stop the assessment of property taxes on the vehicle. Florida and Kentucky residents are also required to return or cancel their plates.

I would remove the license plate once I dropped off my vehicle at the dealership. I can then use that license plate on my next vehicle (and not have to pay a new plate fee).

“I grossly overestimated the mileage that I believed I could use in three years. Can I get a credit of some sort?”
Unfortunately, no…

But:

You could try to flip your leased vehicle and make a nifty profit – especially if you sell it privately.

End-of-lease contact information

Acura
Alfa Romeo
Audi
BMW
Buick
Cadillac
Chevrolet
Chrysler
Dodge
Fiat
Ford
Genesis
GMC
Honda
Hyundai
INFINITI
Jaguar
Jeep
Kia
Land Rover
Lexus
Lincoln
Mazda
Mercedes-Benz
MINI
Mitsubishi
Nissan
Porsche
RAM
Subaru
Tesla
Toyota
Volkswagon
Volvo

Here is what to do next…

Almost every car dealership wants us to think that we cannot sell back our vehicle for an instant profit. This is a whopper of a lie… a lie that helps to make dealership owners rich. I regularly see dealerships make an extra $3,500 to $6,000 every time they buy out our lease and resell our car on their used-car lot.

Each lease agreement tells us EXACTLY how much we can buy the car for – it is listed as the “Residual Value”.

Instead of trading in our end-of-lease vehicle for a new car lease, we should sell back our car instead. (And we should lease another car as a separate transaction. This gets us more car for less money – and always $0 cash down.)

We can sell back our car to anyone – from dealerships to people off the street. Our lease agreement gives us this option (it is buried in small print). This is 100% legal and 100% ethical. And it is awesome, because most of the time, the lease buyout amount is often thousands less than the on-going market value. And we get to pocket this easy money (and eliminate the lease’s $350+ “Disposition Fee”) at the same time.

It gets better…

If we have dents, scratches, rips – even too many miles… buying out our end-of-lease vehicle and flipping it rips up our lease contract. We will not owe any damage (or over-the-mileage fees).

Now, here is the coolest part:

Normally, we would have to come up with tens of thousands of dollars to buy out the lease, then resell the car to the public (or to car dealerships).

In fact, if we lease a Ford or Chrysler (or have our lease financed by US Bank), we have to come up with the cash to buy out our lease, then try to flip it.

But for every other lease, we can use other people’s money and exploit flipping…

Because lately, there has been a growing number of car-buying services that will bid to buyout our end-of-lease vehicle. These are Wall-Street-funded companies who AGRESSIVELY seek out people like us with slightly-used, end-of-lease vehicles. They know end-of-lease vehicles are great cars to sell as used. And instead of having physical dealerships, they save a lot of money doing everything over the Internet – operating in every state in the lower 48 here in America…

The best part is these profitable, well-financed companies will pay off our lease AND send us a check for the extra lease equity.

How much?

Of course, it depends on the difference between our Residual Value and the bids we get from these well-funded car-buying services. And since we are getting bids (technically “appraisals”), we simply go with the highest offer and keep the difference. Usually, the lease equity we get to keep is hundreds… sometimes thousands of dollars. The highest I have seen was a flip of a Toyota Tacoma – the lease equity was over $20,000.

How do we know if we can profitably flip our car?

We can get an idea if our vehicle will give us lease equity…

We go to any no-haggle, used-car seller (I always check with CarMax and AutoNation) and look for an average selling price of similar vehicles. I find when the average selling price of our end-of-lease vehicle is at least $2,500 more than my vehicle’s Residual Value (again, found on our lease agreement), then I am virtually certain we can flip the car for a profit. Even better, we do not pay that nasty $350+ Disposition Fee).

With access to this list of car-buying services, we pick the highest bid. Then we schedule a pickup of our vehicle (they will bring a flatbed tow truck to our home or office). And we get a check Fedexed to us the next day for the lease equity.

It is SO convenient. (We skip the hassle of returning it to the original dealership and never have to worry about damages or over-the-mileage penalties).

GREAT news: I got the list

I have an always-updated list of these Wall-Street-funded car-buying services. (I update my list every day). And I make my list available for my KTL USA At-Home Car Leasing System clients.

I saved the best part for last:

Getting access to my entire system is virtually free – because when we flip our end-of-lease vehicle, we do not have to pay that $350+ disposition fee. This charge vanishes. And since my entire leasing system is $299, it is like getting my entire system at no charge…

Before you get my system, I recommend reading the most popular posts on my site – click here to get it in seconds

Question: Is turning in a leased car early for another lease worth it?

Hello Markus,

My current lease on a 2015 Nissan Altima is up on 12/01/2017 and my last payment will be automatically debited on 11/01/2017. I have had an inspection and will have a lease end balance of wear/tear charges for a broken fog lamp $230, chipped windshield $55, disposition fee ~$300.

I visited dealerships and test drove 3 different vehicles…

And all the dealers have told me they would pay off the rest of my current lease.

Should I take advantage of this while using your system?

Thank you for your time and help.

BB

Yes…

Of course, every dealership wants to pay off the remainder of our current lease…

Because this is how dealership owners get RICH.

Here is why:

Continue reading “Question: Is turning in a leased car early for another lease worth it?”

How to make a tidy profit turning in a leased car

Hi Markus, What should I do if im leasing a car now and need to turn it in? Will your system work this situation? Thank you in advance!

The short answer is yes.

I am helping one of my clients do the EXACT same thing – right now.

Let me share the details with you:

Continue reading “How to make a tidy profit turning in a leased car”

How to turn end-of-lease cars into extra cash

When I look to lease a new vehicle, I try to choose one that can be flipped for a tidy profit.

Yep:

When my lease is about to end, I do not turn it in. This is a mistake most people make when their car lease ends.

Instead, I sell it to the highest bidder for a fast and easy profit.

This might come as a shock, but it is true: we do not have to turn in a leased car at the end of the term.

Now, car dealers want us to turn it in… because they have the option to secretly buy the vehicle from the leasing company and flip it for a fast and easy profit.

We can flip it for profit, too

As long as we lease the right vehicle at the right price and at the right time, we can ALWAYS flip a leased car for profit – at any time during the lease.

“Come again, Markus Allen – you flip leased cars? I thought we could only turn them in or refinance them at the end?”

I know, I know. The myth that we have to “turn in our leased cars” has been around since leasing became popular in the 1950s…

Leasing is the ultimate hedge

But the truth is we have many options as our lease is coming to an end. This includes:

– Turn the vehicle in and walk away…
– Buy it outright and keep the vehicle…
– “Flip it” for profit.

Most vehicle leases are known as a “closed-end lease” or “walk-away lease”. For example, we lease for 36 months, then walk away from it – turning it in. And then we get into another vehicle.

These leases include the buyout amount (in small print on the lease contract).

This amount is exactly the same as the vehicle’s Residual Value at the end of the lease term:

flip buyout amount

We can easily calculate the total cost of buying out a leased car at any given time…

We just need these 3 amounts:

– Current dollar amount of the remaining payments owed +
– Residual (or buyout) value +
– Purchase option at end of lease term

In the above example, if there are 6 payments remaining on my lease, the maximum cost to buy this car right now is:

$2,739.66 (i.e. 6 months @ $456.61) + $22,483.65 + $350.00 = $25,573.31

(I say “maximum”, because we do not pay interest on the remain 6 months. So we might save a few dollars.)

So:

If I am able to find someone to buy my 30-month old leased car for at least $25,573.31, I make a profit.

How much profit can I make flipping my leased car?

I know people who regularly buy end-of-lease cars and sell it for more than $5,000.00 profit.

One Canadian flipped her Toyota Tacoma when her lease ended and netted over $10,000.00 extra.

Speaking of Toyota, the FJ Cruiser now retains a 98% value, because it is popular (and no longer manufactured). Many report flipping these and making over $15,000.00.

The flip side of the flip

On the “flip” side, Hyundai and Kia just recalled over 1.5 million vehicles a few days ago. This could plunge the value of the entire brand – causing our leased car to be “underwater”… valued less than what is owed on the car.

The good news about leasing is we can skip the flip if this happens and just turn the car in and walk away.

The downsides of flipping to the general public

So how much can we profit on a flipped lease car?

Of course, the answer is, “It depends”…

It depends on how we sell the car (and how much the car sells for).

For example, I might put an ad in Craigslist to attract possible buyers. It is 100% FREE. And most people I know say it is the best way to attract potential buyers.

Yes. This invites a bunch of strangers to our house…

And yes, it is a major hassle…

But:

It is the fastest way I know to make thousands and thousand of dollars on the flip.

Of course there is a massive downside of selling a vehicle direct to the public…

If we sell a faulty vehicle and refuse to warrantee it, people will get angry. And they might go postal on us.

Even if we babied the car – if a buyer perceives that we sold them a lemon, they will get angry. And since they know where we live, it probably will not end well.

The safer way to flip a leased car

We make less profit selling our leased car at any used car dealership or car-buying service.

Since they are in the vehicle-flipping business, they will payoff our balance and write us a check, too…

For this convenience, our “flip” is less profitable.

On average, we bank about half of what we would profit selling our leased car to the public.

The big advantage of selling our leased car to a dealership is cash flow and lack of hassle….

They have lines of credit that enable them to pay off the balance owed to the leasing company. Plus they have cash to pay us for our leased-cars extra equity – usually in the form of a company check.

And the process could not be easier – they appraise our vehicle in writing. If we agree to it, they buy out our car on the spot. They pay off the balance to the leasing company AND write us a check for the equity left in our leased vehicle.

They also handle the dirty work… including all the paperwork and money transfers.

Even better, we can have our vehicle appraised by different used-car dealerships. Hells bells… we could get dozens of appraisals and sell it to the highest bidder – if we have the time.

(Each appraisal takes about 40 minutes.)

Most important, they do the flipping for us.

This includes investing money to fix minor issues, advertising our leased vehicle – even arranging financing for the buyer.

When we sell our vehicle to a used-car dealer, they pay off the remaining balance on our lease, cut us a check for the equity… and that is it. It is almost too good to be true.

How to find the right vehicle to flip

Some vehicles are more “flippable” than others.

And there are several ways to guess at the profitability of each lease-end vehicle.

Most look to published RVs…

RV stands for Residual Value. And Residual Values are dependent on RPs (Residual Percentages).

For example, a Toyota Tacoma might have a 70% Residual Percentage in 36 months. That means a $23,000 Tacoma estimated trade in will be a Residual Value of $16,100 3 years from now.

Typically, any vehicle with at least a 55% Residual Percentage holds its value well. And this is usually a good thing.

The dirt little secret about RVs (revealed)

But:

Just because it holds its value does not guarantee its a good candidate to flip.

Why?

Because some manufacturers like BMW and Mercedes inflate their Residual Values. This gives us a secret discount on their leased vehicles (without sounding like they are discounting).

The problem is the Residual Values at the end of the lease term are usually inflated, too. And when RVs are artificially inflated, we will probably have a vehicle underwater when the lease ends.

The other problem is Residual Percentages change a lot. They change based on how many months we lease a vehicle. They change based on our credit Auto FICO score. And they even change when dealers get sneaky and change them for no clear reason (I see this a lot).

The virtually bulletproof way to flip a leased vehicle

The good news is we can virtually guarantee that our flip will succeed.

First, we need to get a good estimate of our vehicle’s worth when the lease ends.

Sure, there are lots of lookup websites that check the value of our vehicle…

But the problem is they are often off by thousands of dollars.

What I do is crowdsource the values.

I visit CarMax.com – look for the vehicle I want to get… and search for it used and under 40,000 miles and 3 years old.

Take a look at these listings for a Chevy Traverse LTZ:

flip Traverse LTZ

As we see, the average selling price for this used vehicle is around $30,000.

That tells me we can flip this car and sell it to the public for at least the same – maybe more.

Of course, some of us do not want to be hassled with selling our vehicle:

So the second-best option is to flip it to a car dealership or used-car buying company and make about half the profit.

How to know in advance if a flip is profitable

As I said before, knowing the Residual Percentage and Residual Value is an estimate.

Because there are too many “unknowables” until we pick the exact vehicle we want with the number of months and number of miles.

And then the dealership needs to run a credit check on us.

There is only one guaranteed way to know the EXACT buyout amount. We need to get a draft copy of our lease agreement.

For most, this is virtually impossible to get ahead of time. This is on purpose. Car dealerships are HIGHLY reluctant to let us inspect a lease agreement. Instead, we only see it seconds before we sign the paperwork.

But:

My clients get a draft of their lease paperwork sent to their email inbox in just a mouse click. This gives us unlimited time to look it over.

If you are a KTL subscriber, it is email template #3. Send this email to the dealership. Within a few hours, the dealership will reply back with a lease agreement draft – which includes the exact buyout amount.

Then it is simple math:

To figure out the likely profit potential of our vehicle’s flip, take the average CarMax price minus the buyout amount.

FAQs

What is the safest way to sell a car – I have heard of “cashier’s check” scams?

Arrange the meeting for payment inside the seller’s bank so we can watch a cashier’s check being drawn and issued directly to you.
If paying cash, we can meet at a police station.

What if my car is underwater, and I am over the allotted mileage? Can I still flip my lease for profit?

I would visit at least 3 different dealerships and used-car buyers and ask for an appraisal on my leased vehicle. Each amount will be different. We could get lucky and come close to break even. I know of a lot of people thinking they were underwater, but came away with a small profit when the dust settled… especially when selling their car via Craigslist.

The good news is the average over-the-mileage wholesale cost is about 9 cents – no matter what vehicle. And when we sell back our leased vehicle, it goes down in value at a wholesale rate. This is WAY cheaper than the retail rate of 15 cents… 25 cents – heck, I have even seen $1.00 over-the-mileage fees.

And I would not “wait it out”. I would do it immediately. The faster we get out of a bad lease, the faster we can get into a great lease.

Reading that it’s possible to sell a car near the end of a lease to a dealer turned on a lightbulb over my head, but I was confused about how much value this posed for the dealership.

Obviously the greater the value, the greater the opportunity they’d have for granting me concessions. So my question keys on whether the dealership pays me the full residual value directly, and I pay off the car company, or does the dealership instead pay off the car company directly at the wholesale price of the car, which would be lower than the residual value, and in turn offer me a check that’s a percentage of the spread between the wholesale price they’ve paid and what they anticipate they’ll get by selling the car at retail?

Let’s say I have a Lexus with a $30,000 residual value and the market average retail sale price for this particular car is $32,883. If a Lexus dealership only has to pay a wholesale rate of $25,000 or less for my car, they’d have room to either pay me some cash or grant me concessions on the new Lexus I’d like to lease. I’m especially interested right now because local dealers are advertising factory incentive leases for $419 for 36 months with $4499 due at signing. These rates are lower than their usual 2018 RX 350 lease rates and this promotion ends January 31. So I’m wondering if my super-low mileage version might induce them to wave the $4499?

Let me answer in reverse about your lease equity question:

The $419 for 36 months with $4499 due at signing will cost you more than $600.00 a month when the dust settles. Because when you factor in that HUGE down payment, hidden fees (and rent charge), it adds more than $180 a month to the final payment.

Bottom line: I NEVER look at advertised “deals”, because they are missing thousands in fees and extras. And they need massive down payments (which are totally unnecessary to pay).

Also, I anticipate the manufacturer incentives to become sweeter next month and the month after. That is how the timing works in the car leasing industry. One month the deals are so-so, then better the next… even better the next – the cycle lasts 3 months. Rinse and repeat. So I would not get trapped in Lexus’ pressure tactics of rushing into something this week.

About your lease-equity question – specifically in your situation:

Anyone with a pulse and $30,000 can buy out your lease. If you buy it out early, you add the remaining payments plus $30,000.

There is no wholesale rate that I am aware of. With that said, a Lexus dealer (or anyone with the cash) can ask for a reduction in the buyout as a standard operating procedure – which is like getting a wholesale rate. (See more about this below.)

I recommend contacting Lexus Financial Services and request a 10-day payoff. We can request one as many times as we want. Hells bells, we can call every 10 minutes if we want. Why would we keep calling? Because situations change – and Lexus Financial Services might lower the buyout price because of “circumstances”. (They can also raise the price back up to the residual value plus remaining payments).

What “circumstances” might come up?

Perhaps they do not want the car to go to auction and might be willing to lower the buyout amount.

Or:

Like in the case of Volkswagon, their recent emissions scandal is plummeting the value of their cars.

Or:

Electric cars are taking a huge hit to their resale value. Electric batteries need to be replaced in as little as 36 months. And they are often not covered under warrantee. And they are super expensive to replace. So the leasing company might drop their buyout amount significantly. I see this happen a lot with Chevy Bolt electric vehicles.

Also:

I always ask for a 25% discount on the buyout amount. The worst-case scenario is they say no. There is nothing lost for trying. Asking for a discount often gets the leasing company to lower the buyout amount.

Now:

As I said in my “flip” tutorial, dealerships LOVE buying off-lease vehicles. Since we treat them well (and keep the mileage low), they do not have to invest much to flip them on their used-car lot. Typically, they aim to profit $2,000 to $6,000. So, they are going to low ball us with an offer. Sometimes, this low-ball offer might net us hundreds of dollars. Other times, we might owe hundreds of dollars. Of course, being over the mileage allotment means we might owe thousands.

The real profit comes when we sell the car privately – especially if we can lower the buyout amount by at least 10%. Of course, private selling is a bit of a hassle. In most states, someone pays off the leasing company’s buyout amount. Next, the lessee gets the title in the mail. Then we have to transfer the title to the new owner at the DMV (or notary) – usually within 10 days to avoid paying local/state sales tax.

Here is what to do next…

Almost every car dealership wants us to think that we cannot sell back our vehicle for an instant profit. This is a whopper of a lie… a lie that helps to make dealership owners rich. I regularly see dealerships make an extra $3,500 to $6,000 every time they buy out our lease and resell our car on their used-car lot.

Each lease agreement tells us EXACTLY how much we can buy the car for – it is listed as the “Residual Value”.

Instead of trading in our end-of-lease vehicle for a new car lease, we should sell back our car instead. (And we should lease another car as a separate transaction. This gets us more car for less money – and always $0 cash down.)

We can sell back our car to anyone – from dealerships to people off the street. Our lease agreement gives us this option (it is buried in small print). This is 100% legal and 100% ethical. And it is awesome, because most of the time, the lease buyout amount is often thousands less than the on-going market value. And we get to pocket this easy money (and eliminate the lease’s $350+ “Disposition Fee”) at the same time.

It gets better…

If we have dents, scratches, rips – even too many miles… buying out our end-of-lease vehicle and flipping it rips up our lease contract. We will not owe any damage (or over-the-mileage fees).

Now, here is the coolest part:

Normally, we would have to come up with tens of thousands of dollars to buy out the lease, then resell the car to the public (or to car dealerships).

In fact, if we lease a Ford or Chrysler (or have our lease financed by US Bank), we have to come up with the cash to buy out our lease, then try to flip it.

But for every other lease, we can use other people’s money and exploit flipping…

Because lately, there has been a growing number of car-buying services that will bid to buyout our end-of-lease vehicle. These are Wall-Street-funded companies who AGRESSIVELY seek out people like us with slightly-used, end-of-lease vehicles. They know end-of-lease vehicles are great cars to sell as used. And instead of having physical dealerships, they save a lot of money doing everything over the Internet – operating in every state in the lower 48 here in America…

The best part is these profitable, well-financed companies will pay off our lease AND send us a check for the extra lease equity.

How much?

Of course, it depends on the difference between our Residual Value and the bids we get from these well-funded car-buying services. And since we are getting bids (technically “appraisals”), we simply go with the highest offer and keep the difference. Usually, the lease equity we get to keep is hundreds… sometimes thousands of dollars. The highest I have seen was a flip of a Toyota Tacoma – the lease equity was over $20,000.

How do we know if we can profitably flip our car?

We can get an idea if our vehicle will give us lease equity…

We go to any no-haggle, used-car seller (I always check with CarMax and AutoNation) and look for an average selling price of similar vehicles. I find when the average selling price of our end-of-lease vehicle is at least $2,500 more than my vehicle’s Residual Value (again, found on our lease agreement), then I am virtually certain we can flip the car for a profit. Even better, we do not pay that nasty $350+ Disposition Fee).

With access to this list of car-buying services, we pick the highest bid. Then we schedule a pickup of our vehicle (they will bring a flatbed tow truck to our home or office). And we get a check Fedexed to us the next day for the lease equity.

It is SO convenient. (We skip the hassle of returning it to the original dealership and never have to worry about damages or over-the-mileage penalties).

GREAT news: I got the list

I have an always-updated list of these Wall-Street-funded car-buying services. (I update my list every day). And I make my list available for my KTL USA At-Home Car Leasing System clients.

I saved the best part for last:

Getting access to my entire system is virtually free – because when we flip our end-of-lease vehicle, we do not have to pay that $350+ disposition fee. This charge vanishes. And since my entire leasing system is $299, it is like getting my entire system at no charge.

Click here to get my KTL USA At-Home Car Leasing System virtually FREE…