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 business as usual and just return the car to the dealer when the lease ends. 

Used car values skyrocketed as a result of the unusual twists and turns in the economy during the COVID-19 pandemic, particularly for some high end trucks. Essentially, a shortage of new cars – thanks to cuts in production in the early days of the virus – 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. 

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Granted, this is one of those out-of-the-box 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. 

And if, for example, your leased vehicle has seen a few dings and extra miles, you might want to go through the typical lease process and return your car to the dealer because you’d have a tough time making good money by selling the car on your own. 

In some cases, you even might be better off buying the vehicle at the end of that 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. 

Ram pickup trucks sit on a dealership lot in Fairfield, Texas, USA, 12 May 2017. Fiat Chrysler recalled over a million Dodge Ram pickup trucks because of a software problem. (Photo: LARRY W. SMITH, EPA)

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 thing that’s odd about 2020 – and so many things are – is that you might have put on far fewer miles than expected in the past six months because you’ve been working from home or you’re 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.

Looking for an exit strategy in 2020

As people work from home during the pandemic and may not return to the office soon, many are questioning what kind of car they really need.

Finding an exit strategy for a lease sounds sensible – especially if you’ve lost a job or you’re making substantially less money. 

Scot Hall, executive vice president of operations for, said his wife has been working from home since late March but had six months left on her GMC Yukon XL Denali. The couple was able to go to a local car dealership that ended up buying the Yukon. They saved six months of lease payments and walked away with a couple of thousand dollars.

“The gains are probably going to be greater on a high-end luxury vehicle,” Hall said. 

Even so, he said, some money can be made with lower-priced cars and trucks because of the way lease payoffs work. Generally speaking, it’s more common to have built up equity with a year or less to go on the lease. 

Hall said equity has been building up sooner, as used car sales have increased significantly in 2020. 

But remember, the restrictions in a lease contract are important to understand.

“You cannot sell a lease to another individual without first buying it,” Hall said. 

Swapalease typically provides an online marketplace for matching up a driver who wants to get out of their lease contract with a car shopper who is looking to take over a short-term vehicle lease. And if you don’t have much equity in a vehicle, swapping a lease through a group like Swapalease or can be an option. 

Often, a consumer can need to pay several thousands of dollars to terminate a car lease early. So people are looking at other strategies.  

How do you run the numbers? 

Selling a leased car, instead of simply returning it to a dealer, has become more of an option as used car values go up. 

The first step is to look at your paperwork for your lease or contact your leasing company to understand the residual price or buyout price at the end of the lease.

The leasing company also can tell you what the buyout price would be if you wanted to buy the car or truck several months before the lease ended. 

Then, you’d want to compare that price to what you might get if you tried to sell that car on your own. Check out websites such as and Kelley Blue Book. 

Next, you need to play with some numbers. Subtract the current lease payoff from the current market value. This is how you’d figure out an estimate of how much equity you have in the car and how much money you might make by selling a car on the open market. 

You’d need to check the equity you have in your vehicle, experts say, to see whether you can trade it in to offset the cost of a new car or turn a lease into cash.

A Ram 1500, for example, has an average residual price of $24,073 if leased in 2017, according to data from Edmunds. By contrast, it could sell for $28,292 on average on the open market. That’s a potential profit of roughly $4,200. 

But the spread might just be a few hundred dollars or far less on other types of vehicles, such as a 2017 Ford Escape, according to Edmunds.

Edmunds analysts looked at all vehicles leased in 2017, the average manufacturer’s suggested retail price for these vehicles when leased, their average buyout price at lease expiration, and their average private-party values.

The Ram 1500 had the biggest possible profit, but some other vehicles had respectable differences, too.

The 2017 Toyota Prius Prime has an average buyout price of $14,971 but an average sale price on the open market at $17,840 – with a gain of more than $2,800. 

Other leased vehicles that could unlock big cash include the Chevrolet Camaro (average profit: $3,857); the Ford Mustang ($3,710); and the Jeep Renegade ($3,392).  

Three-year-old leased luxury cars also had strong possible profits if a consumer decided to buy out the lease and then sell that vehicle. Edmunds noted that the ultra high-end Porsche Panamera  – with a value of $117,000 when new – yielded the highest profit for luxury vehicles, generating around $11,820 on average. The buyout price is $64,360 but is expected to sell for more than $76,000. 

But what’s your car really worth? 

You have to get some initial offers and appraisals to gauge what kind of a price you’d get for your specific car, based on its condition. You can’t expect to get a great price if you’re car has been in a big accident or only has basic equipment. 

Drury noted that consumers also need to understand that they’re often going to pay a disposition fee at the end of the lease – a flat fee to cover the costs of clean up and repair any damage to the vehicle and bring it into a suitable condition for resale. The disposition fee is spelled out in the lease agreement.

If you sell it on your own, you’re also avoiding paying that disposition fee. 

Many people aren’t going to have $20,000 or $24,000 or more on the sidelines to buy their leased vehicles at the end of the lease. But they may be able to find instant offers for the car online and possibly take out a short loan to buy the car and then sell it. 

Online car dealers, such as Vroom and Carvana, offer a quote for a cash sale. You will have to fill out details about your car, such as whether you’ve smoked in the vehicle, had damage from hail, and how many miles you have on the existing tires. 

CarMax also will buy your leased car and gives this detail online: “In most cases, you can sell your leased car in almost the same way as any other financed car. We’ll appraise the car, then contact the leasing company for a payoff quote and process any equity you might have. Please note that some leasing companies will not allow you to sell the car prior to the expiration of the lease. Also, be aware that your leased car might not be eligible for trade-in tax savings. Check with your leasing company for complete details.”

Knowing where you stand when it comes to the value of that leased car or truck is essential in 2020. In some cases, you might be able to negotiate and convince a dealer to waive a $300 disposition fee or give you a break on other extra charges for wear and tear if your vehicle is worth far more than was expected just three years ago. 

Contact Susan Tompor via [email protected]. Follow her on Twitter @tompor. To subscribe, please go to Read more on business and sign up for our business newsletter.

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