3 Ways to Turn Equity Into Cash
If you have equity in your leased car, here’s how to turn it into cash. Keep in mind, though, that these strategies may not apply to everyone:
1. Sell your leased car and get a check. The fastest way to sell your leased car is to get an Edmunds instant offer, which is good for seven days and is redeemed at participating dealerships. Just enter a few details about your vehicle and soon you’ll have a firm price for your vehicle. You can also take your car to any dealer, not just the one where you arranged the lease, and let the dealer buy the car at the trade-in price. The dealer will pay the leasing company what you owe and give you a check for the equity. However, Whitmire cautions, don’t expect the money immediately. The dealership will mail you a check once it gets a clear title, assuring that your car doesn’t have any outstanding parking tickets. Ask to get the trade-in agreement in writing and state the amount due to you, Weintraub says.
2. Sell your leased car to a neighbor, friend or family member. This method requires a bit of trust, so it helps to sell your car to someone you know. But this will work with any buyer you find, and it will get you the private-party price for the car, which is higher than the trade-in price dealers pay.
Here’s what you do: After finding a trusted buyer, have that person mail a check for the buyout amount to the leasing company. Once you receive the title (the leasing company will only send it to the person leasing the car), sign it to release your interest in the vehicle, and give the title to the buyer. The buyer can then register the car and pay sales tax at that time. But be careful: If the buyer waits longer than 10 days, the state might try to charge you both sales tax, which would wipe out your profit.
A way to prevent this situation, according to the Auto Club of Southern California, is to pay the sales tax and DMV fees as soon as possible and then return to conclude the deal with the title in hand. This transaction is called a “lease buyout transfer.” Contact your state’s DMV for more details.
3. Use it as the down payment on your next car. In this scenario, the equity in your current car becomes a cash down payment for the new one. Once you know you have equity, you can take your car to any dealer to begin a new lease or sales contract. Negotiate just as aggressively as you normally would. Not all dealers will offer you the same amount for your leased-car buyout, so you might have to shop around for the best offer. It should be close to the Edmunds trade-in price.
Weintraub said you might get more money if you are going “brand to brand,” meaning selling a Toyota to a Toyota dealership, although any dealership can handle the transaction.
It’s important to make sure all the numbers add up. Agree on the exact amount of equity you will receive and look for that amount in the down payment box on the contract. Alternatively, you can also use the equity to pay the fees required to begin a new lease rather than pay that money out of pocket.