Average Leased Electric Cars Worth $4,000 More
According to a recent report from CNBC, “The average trade-in value of 2020 leased cars is 19 percent more than the predetermined residual value.” If you are one of the 3.3 million people who leased a vehicle in 2020 and are getting close to the end of your three-year lease, you may want to buy your lease car rather than just turn it in.
While that 19 percent averages out to about $4,000 more than the lease contract residual value (the car’s value at the end of the lease), CNBC says the positive equity is even higher for those who leased a car in 2019, averaging a gain of $7,208. That’s like money in the bank if you have a lease car contract from 2019 or 2020.
Hybrids and EVs are all about technology and today’s consumers are finding that leasing that tech makes a lot more sense that buying it. That makes sense when you realize that some auto financing runs eight years and by the time you own that vehicle, the technology will be ancient. Research by Bloomsburg shows that American drivers lease 80 percent of EVs and 55 percent of plug-in hybrids.
One of the reasons for this high percentage of leased fuel-efficient vehicles is that currently, there is less demand for used battery-powered vehicles on the market. That may change with the new federal policy of incentives for used EVs. But the biggest reason why people lease a hybrid or EV is the expectation of significant technology changes within the next three to five years.
Hybrids and EVs with the Most Value
With this in mind, you may want to look into buying or trading your 2019 or 2020 lease car rather than just turning it in. Of all the car brands and models leased in 2020, the Mercedes-Benz GLS-Class sedan captures the highest worth over its estimated residual value, up 22 percent. That means it may be worth over $11,300 more than expected. And making money on your lease car is not limited to luxury models. According to the CNBC report, the Toyota Sienna minivan is worth approximately $8,700 more than its contracted residual value while a Ford Mustang is worth over $8,500 more. But other high value lease vehicles in the top five include the Toyota RAV4 Hybrid that has a value of over $8,470 over its original estimated residual value, and the Chevrolet Bolt EV that could bring you around $8,400 as well.
Honda’s leased hybrids such as the Accord and CR-V are worth more today than when they were when leased in 2020 as are Toyota’s extensive line of hybrid and PHEV sedans, crossovers and SUVs.
The Positive Equity Advantage
If you have a lease on a 2020 hybrid, plug-in hybrid or all-electric vehicle, it may be worth considerably more than your lease contract’s assigned residual value and you might be able to use that positive equity as a trade-in or even cash if you decide to buy out the lease. If you buy the car today, you’ll be getting it for less than if you bought it off a dealer lot.
Depending on the lease contract, you might be able to buy the vehicle early and sell it for a profit. The finance company may also allow you to sell the car to the dealership of your choice. This is called a third-party buyout and you’ll have to check your lease contract for details. Some automakers require you to return the lease vehicle to an authorized dealership.
You can also realize a profit if you are trading in your lease car for a new hybrid or electric vehicle. According to a recent article by Forbes on how to cash in on the high value of your leased car, “A little homework in the months before your lease return can yield significant return toward your next vehicle.” The article suggests that instead of buying your lease vehicle outright, you can trade in the leased car and apply the equity towards another vehicle.