How to Sell a Leased Car

Leasing is one of the easiest and fastest ways to get a new car. It is more convenient and flexible, as it allows you to make smaller monthly payments but still drive a decent car. However, there are many situations that might necessitate the sale of a leased car.

For instance, when you want to switch cars and pick a different model or type, or when you want to end your lease agreement earlier because your financial situation recently took a hit. Whichever the case, the main question a lot of people ask is, “can you sell a leased car?”

The simple answer is yes! There is no better time to sell your leased car than in the current market. The value of used cars has hit a record high because of the increase in demand for them, coupled with a shortage in their supply.

This means that you can sell your car and still make a huge profit from it. So, if you’re looking to get rid of your leased car but don’t know what approach to take, this article will guide you through the whole process.

Terms You Should Know Before Selling Your Leased Car

There are a few terms that get thrown around often in the car leasing industry. It would be helpful if you knew them before you embarked on selling your leased car. Some of the main ones include:

  • Residual Value: This is what the leased vehicle will approximately cost after factoring in wear and tear that occurs during the leasing period.
  • Market Value: The market value is the average price that the leased car would go for in the marketplace at the time of valuation.
  • Lease Buyout Price: This is the predetermined cost at which you can purchase the vehicle you leased after the leasing period expires. It is a summation of the residual value and outstanding lease payments.
  • Equity: Equity means the difference between the market value of the leased vehicle and the lease buyout price. If the former is greater than the latter, then you have positive equity and you stand to make a profit after selling. The converse is also true.
  • Disposition fee: A disposition fee is the amount of money you must pay the leasing company at the end of your agreement to cover restoration costs before the car can be sold again.
  • Early Termination Fee: This is the hefty cost that you incur when you end your lease agreement before the specified date.
  • Depreciation: This is the value by which the vehicle reduces in terms of worth after being used for a known amount of time.

How to Sell a Leased Car

Sell a Leased Car

Selling a leased car is not always a profitable venture. There are crucial steps that you should follow when selling your leased car to determine if you will make any profit. These are:

Step 1: Determine the Residual Value in Your Lease Contract

The first thing that you should do is determine the residual value of the leased car from your lease contract. This is an estimation of the vehicle’s worth after the leasing period expires, taking into account the depreciation that might happen due to wear and tear.

Additionally, this is the potential amount of cash you will likely part with to buy the vehicle you leased once the leasing period expires. This amount will help you figure out your potential profit margins once you sell the car.

Luckily, the used car market has been hit with a shortage, which has driven up prices. So, if the residual value of your car is fairly low, you can buy it from your leasing company and sell it at a profit.

Step 2: Determine the Buyout Price

The next thing you should do is determine the buyout price for the vehicle you leased. One way you can do this is by contacting your leasing company and requesting that figure. Alternatively, you can approximate it on your own.

To estimate the buyout price, sum up all the lease payments that you haven’t made with your residual value. For example, if your vehicle has a residual value of $9,000 and you still owe $2,000 in monthly lease payments, your buyout price will be approximately $11,000.

It is important that you take into account sales taxes and any other fees, e.g., disposition fees and termination fees, when determining the buyout price of your vehicle.

Step 3: Compare with the Current Market Value

Once you’ve determined the buyout price, the next step should be to figure out what the current market value of your car is. This will help you determine whether you can make a profit after selling the car.

There are many ways you can determine the current worth of your vehicle. The simplest one involves the use of online valuation tools. These tools require you to input details like year, type, and model in order to give you an approximate figure.

Another way to do that is to locate car-buying services online and request a quote from them. You will be required to give sufficient details about the condition of your vehicle. This will help the car-buying service give you an accurate quote.

Compare quotes from at least four credible companies before coming up with an average figure to represent the market value of your car.

Step 4: Determine Your Expected Profit

If you’ve already approximated the current market value of your car and its buyout price, then you can easily calculate the amount of profit that you can potentially make when you sell it. Just subtract the residual value from the market value of the vehicle to get the estimated value of profit.

Where Can You Sell a Leased Car

You can begin the process of selling your car once you’ve determined that you can fetch an amount higher than its buyout price from it. Here are the main options you can consider:


Can you sell a leased car to a dealership? Yes, this is the simplest way to get rid of a car that you leased. Why? Dealerships already have their own customer base, so you won’t have to look for one. Additionally, all dealerships have a dedicated team that takes care of all the documentation and financial aspects of the deal.

The obvious option would be to sell it back to the dealer who leased you the vehicle. Alternatively, you can look for a totally different dealer. You can do this by searching for dealerships that are nearby and getting quotes from them.

You can contact the dealership that provides the best offer to finalize the sale. However, they will have to confirm that the car has no issues before they give you money for it.


Instead of selling your leased car to a dealership, you can opt to offload it to an individual. You can start with people you know, such as family members, neighbours, workmates, and friends. On the other hand, you can list your car online to find a potential buyer who will then contact you and negotiate the price.

The advantage of selling your car to individuals is that you will dictate the price at which you’re willing to sell the car and the profit you’re going to make. The only downside is that there are long waiting times as you wait for the lease buyout to be processed.

The leasing company will then send you the title so you can append your signature and relinquish any interest in the car. They will then give the buyer the title so that they can complete the registration process and pay the sales tax on the vehicle.

Firms that buy cars online

The rapid increase in technology has caused numerous car-buying firms to sprout online. Like physical dealerships, car-buying firms are willing to pay big bucks for leased vehicles in good condition. Sites such as CarMax and Carvana will pay the car leasing company for the vehicle.

After that, they will calculate how much equity your car has, process your payment, and pick the vehicle themselves.

Third-Party Buyout Restrictions

All leasing contracts come with a specified buyout price. However, this buyout price is usually applicable only to you. As an extra precaution, some lending companies add a third-party buyout restriction clause to the leasing agreement.

In this situation, third parties, e.g., dealerships or individuals, are restricted from purchasing the car at the stated buyout price. This differs between lending companies. Some companies set a much higher buyout price instead of restricting third-party buyouts.

For instance, a leasing agreement may set the buyout price at $15,000 but set a much higher third-party buyout price of $20,000. This means that for a third party to purchase the car from you, they need to pay an extra $5000.

To bypass contracts with third-party restrictions, you can just use the procedure below:

  • Purchase the vehicle you leased at the buyout price stated in the agreement.
  • Fill out the necessary paperwork to transfer the vehicle’s registration and title to you.
  • The second step makes you the sole owner of the vehicle and gives you all the rights to sell it for whatever you like. Now you can sell it at a price you estimate will make you enough profit.

Return the Leased Vehicle Early to the dealer

You can also opt to take the car back to the dealer much earlier. Try to take it while the market value of the car still exceeds the buyout price.  The difference can help cover penalty, depreciation or disposition fees that you might have incurred during the leasing period.

This difference or your car’s equity, as it is called, can also be used as a down payment for the next vehicle you’d like to purchase.

The Bottom Line

Hopefully, this article has provided the answers to the question, “Can you sell a leased car?” There are many avenues you can look at if your vehicle has positive equity. You can approach your nearest dealership or sell it to a private party to get some good money from your lease.

However, you need to find out if there are any third-party buyout restrictions in your agreement before you can sell. If they are present, the best option would be to purchase the lease before placing the vehicle on the market.

Frequently Asked Questions (FAQ)

Can You Sell a Leased Car?

Yes, you can. But first, you will need to contact your leasing company and complete any pending lease payments. Additionally, you have to be sure that the market price of the vehicle is higher than its buyout price for you to make any money out of this deal.

Should You Buy a Car at the End of a Lease?

Buying a car at the end of a lease can be a great option if you are already used to it and don’t want to look for a used vehicle whose history you’re not sure of.

Will my Credit be Negatively Affected if I end my Lease Early?

No, canceling your lease earlier than the supposed date will not affect your credit score. However, your credit score will be negatively impacted if you fail to settle early termination fees and penalties.

Where Can You Sell Your Leased Car?

There are numerous places where you can sell your leased car if you’ve already estimated its market value and determined that you can make a profit. Firstly, you can try to sell it to dealerships in and around your area. Secondly, you can sell it to your friends and family or list it online to get a buyer.

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