If the lease is structured correctly, the end of term price—called the residualvalue—will be equivalent to the vehicle’s wholesale (auction) price. Which
means that if you like the vehicle, you can view the lease as a greatlyextended test drive, and buy the car outright—for the equivalent of auction (^)
pricing. On the other hand, if it doesn’t meet your needs anymore, or if it’sbeen troublesome, it is now someone else’s problem.
be a third option: You can sell it on the open market and make someTIP: If the residual is (wholesale) market-correct, there can
money.
That’s because there is an average of $3,000 or more between auctionprice and average retail value on three-year old cars. The only caveat here (^)
is sales tax, which varies state to state. In general, only licensed dealerscan purchase a car from a lease company without paying sales tax, which (^)
averages around 7 percent nationwide. If you decided to buy it out and thenresell it, the sales taxes will usually eat up much of your profit.
But many reputable dealers are willing to help by allowing you to run thewhole transaction through their own title offices for a modest fee ($100-
$300), and “flip” it to the new retail buyer that you’ve found, paying you theprofit. This is called a “pass-through.” Talk to a manager—not a
salesperson—to see if they’d be willing to do so.