By Nathalie Voit
Consumers with a lease expiring in 2022 could be in for a pleasant surprise when they head to the dealership this year: your leased vehicle could be worth far more than you realize, according to the car shopping experts at Edmunds.
The market for used cars and vehicles has exploded over the past year due to heavy demand. According to data from the Bureau of Labor Statistics published on March 10, prices for used cars and vehicles are up 41.2% from one year ago. This puts consumers with a leased vehicle from, say, 2019 in a position to make potentially thousands of dollars when they head to the dealership to trade in their car.
“If you’re one of the four million Americans who leased a vehicle in 2019, you could be in quite a financially advantageous position this year and not even know it,” said Edmunds’ executive director of insights Jessica Caldwell in a press release. “Most consumers likely aren’t aware of the other options they have besides turning in their lease once it’s over, including the ability to make a profit from their vehicle. If you have a lease expiring this year, do the legwork ahead of time, so you’re prepared with a game plan and smart financial options.”
Edmunds strongly advised consumers to check the current value of their car before turning it in once their lease is up.
When Edmunds analysts compared the estimated residual values for 2019 model-year (MY) vehicles leased in January and February of that year to the trade-in values for 2019 MY vehicles traded in January and February of 2022, the 2022 trade-in value for all 2019 MY vehicles saw an average 33% growth, or an increase of $7,208, compared to their original expected residual value. For reference, a vehicle’s residual value is its pre-determined worth at the end of a lease.
Among luxury vehicles, the Lexus IS 300 generated the highest percentage return between its current trade-in value and pre-assigned value at the beginning of the lease. The car is now worth 46% more, or $9,868 more, than in 2019. The Ford Mustang commanded the largest percentage increase among mainstream vehicles, trading in an average 68% higher (+$11,852) than it did in 2019.
“These values are completely different from what the residual value estimates were,” said senior manager of insights for Edmunds Ivan Drury. “That’s a good thing for anyone who’s leasing.”
Edmunds said a top 10 list of leased luxury and standard 3-year old vehicles yielding the highest average percentage return could be found in the press release.
The firm also put together a helpful list of tips for consumers exploring their options.
“Unless you’ve driven an exorbitant number of miles or your vehicle has excessive wear and tear, you’re pretty much guaranteed to see an increase in value,” Drury said. “The one drawback is that you’ll likely have to do a bit more legwork than in the past to take advantage of the equity in your expiring lease, given that some auto manufacturers have recently placed more stringent rules on lease purchase options. But taking some extra steps will be well worth it for many, given the financial reward.”
