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Sell your leased car for a profit?

By Claes Bell ·
Wednesday, June 29, 2011
Posted: 11 am ET

Coming to the end of your car lease? Ann Carrns of the Bucks blog at the New York Times has an idea:

The recent rise in used-car prices may provide a lucrative opportunity for those with leases to come out ahead of the game.

That's because dealers set a so-called residual price when they lease a car -- what the car is expected to be worth at the end of the lease. Typically, consumers can either turn their car in when the lease is up, or buy the car for the residual value. (If they want to buy it before the lease is up, the price is called the buyback amount.)

Now, with a spike in used-car prices as a result of tight supply, it's likely that many residual values are significantly lower than the current market value of the car. That means that people whose leases are ending now -- or who want to exit their lease early -- can expect a good deal if they buy the car, or can even turn a tidy profit by selling the car themselves and pocketing the difference.

So how much money is there to be made on such a deal? Carrns cites the example of a 2008 Volvo XC90 with a residual value of $18,500 that could sell for as much as $27,000 today. The difference -- $8,500 -- is nothing to sneeze at, surely.

There's a lot to like here for those coming off leases while this used-car boom lasts. If you like the car and want to buy it, you'll likely get a below-market price for your vehicle.

If you're lukewarm on the car and want to try to go the profit-taking sale route, though, I'd urge caution. I'd make sure before I bought my off-lease car with the intention of selling it, I'd do a lot of homework on what kind of price I could realistically get. It would be really unfortunate to buy an off-lease car you're not crazy about to try and make a quick buck, only to find out the market in your area simply won't bear the price you were expecting.

What do you think? Would you buy your leased car in the hopes of making an easy buck on a quick sale?

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