Why buying your leased car is going to be a smart move

If you rented a car before the pandemic and you are a few months away from the last payment, start here before deciding if the lease repurchase makes sense or if you should hand over the keys.

According to Brian Moody, Executive Editor of Autotrader, you are in the best place possible in this difficult environment to buy cars.

Here’s what you need to know.

Check your lease

Ask your landlord to see what you should pay to buy the car outside of their rental terms now. This information is usually easy to find online by signing in to the account where you make your monthly payments. However, making a phone call to the landlord can also be helpful.

When checking, ask about the associated rates or an early cancellation fee. Contact the landlord directly to determine exactly what you owe if you have any questions.

What about lease purchases from Teslas?

As of April 15, 2022, Tesla TSLA,
ended the lease purchase option at the end of the term. If you rented a Tesla before that date, you can still purchase your vehicle with the agreed purchase amount. For those who rented vehicles after April 13, 2019, a $ 350 purchase fee applies.

The Tesla website states: “All Tesla vehicles delivered after April 15, 2022 are not eligible for purchase. It also states:” Third-party dealers and third-party individuals are not eligible to purchase vehicles. rented “.

Investigate the value of your vehicle

With this information, you can use the Kelley Blue Book car valuation tool to find the approximate value of your rented vehicle. You want to consider the current mileage of your car, as well as any important optional equipment that your car offers. If you have kept the original window sticker that came with the vehicle, this may be helpful.

Now the math is simple: is your car worth more than buying? If so, it may make a lot of sense to buy one.

For example, if the purchase value is $ 25,000, but now the car shows a change value of $ 30,000, you would have $ 5,000 ahead.

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When should I buy my rental?

Tenants should consider buying their lease under certain circumstances, Moody’s said.

“First, if the purchase price is equal to or less than the market value. Most rented cars are usually low to moderate miles and have been well cared for,” he said.

If you have a good car, one that you like and have maintained, it may be a vehicle that you can see driving for a year or so.

You may have heard that the values ​​of used cars are the highest they have ever been. From mid-2021, used car values ​​increased rapidly due to the limitation of new cars to dealer lots. According to a Cox Automotive analysis, by the end of 2021, average listing prices exceeded $ 27,000 for the first time.

“Consider buying your rented car if simply returning it will cost you more to get the car you need to replace it,” Moody said.

Month: The good and bad news about car prices

When to Avoid a Rental Purchase

If math doesn’t help, it might be best to hand over the keys and get away from the rental car.

A more complex decision might involve looking at the car’s reliability history. A manufacturer’s warranty will probably cover your rented car, but it may not extend much beyond the end of the lease.

“You may be inheriting problems that you will now have to pay for in order to fix them along with your car’s monthly payment,” Moody’s said.

You may want to return the car if you have had frequent mechanical or electrical problems or if you have had an accident that has resulted in major repairs that could affect the long-term value of your vehicle.

Can I sell my car immediately after I buy the rental?

Some drivers may see dollar signs when they find that their rented car is worth thousands more than the rental repurchase price.

However, you may want to do some local research first. And yes, if you buy your rental car, you have the right to sell it.

“But many states and counties have laws that prohibit anyone without a dealer license from buying a car for sale immediately,” Moody’s said.

Plus, you’ll probably have to pay for a new tuition and it may take a while for your tuition, registration cards, or stickers to arrive. This may be enough to slow down your plans to turn the car into an immediate benefit.

“Still, once it’s your car, you’re free to keep it or dispose of it as you see fit,” Moody said.

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In addition, a dealer can work with you to buy your rental car as you market it immediately. In this case, you can only have it on paper for a few moments. This could give your replacement car the budget boost it needs.

This story originally continued Autotrader.com.

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