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I leased my car in June 2017 for 36 months and currently 14 months left from my lease. I want to sell the car and lease a SUV.

Details listed below:

  • The car is a Honda Accord The residual value is $15,500.
  • CarMax is paying 16,000 for the car.
  • The mileage on the car is 15,000 miles.
  • I need to pay my registration fee to DMV in two months (it's about $300).
  • I am currently paying $180 per month for the current car.
  • I graduated in summer 2017, so I am eligible for $500 discount from Honda

My goal is to lease a SUV (Honda CR-V or Mazda CX-5) with $0 down payment(I don't want put cash from my pocket, so I just want to use the money I get from selling the Accord) and about $200 monthly payment.

Is there any advice? Where should I sell the car? Should I go with CarMax or should I post it on Craigslist?

Thanks

  • 21
    You can't sell a car that you don't own. If you're leasing the car, the dealer expects you to make payments through the end of the lease and then they'll give you the option to buy the car at the end of the lease. You can't sell the car until you buy it from the dealer at the end of the lease. The dealer you're leasing the car from will probably be happy to let you end the lease early and lease a new car from them but they're not going to do it out of the kindness of their heart. They're going to charge you something though they can probably roll that into the payment. – Justin Cave Apr 24 at 22:45
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    @JustinCave No, that is not correct. For example CarMax buys your leased car and they pay you the difference (in my case $500). Thanks for your comment. – Jacob Apr 24 at 22:49
  • If wanting to go CR-V you should see what the dealership you lease your Accord through can/will do, but you aren't obligated to go through them, just might be the most convenient route. Don't think you'll find a CR-V lease at $200/month, seems like current offer is ~$250/month with $2600 down. No experience with all that though, leasing doesn't seem prudent to me. – Hart CO Apr 24 at 23:01
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    CarMax will happily attend to the paperwork of contacting your dealer, arranging to buy out your lease so that you own the car, then buy the car from you. Your dealer is still going to charge you something for that. And CarMax will need to make a profit on the deal. – Justin Cave Apr 24 at 23:01
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    Is the residual value $15,500 now, or will be when your lease ends in 14 months? – Ben Voigt Apr 25 at 3:23
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After seeing the debate in the comments about selling a leased vehicle at Carmax, I checked the CarMax site:

Do you buy leased cars?

Yes! In most cases, you can sell your leased car in almost the same way as any other financed car. We’ll appraise the car, then contact the leasing company for a payoff quote and process any equity you might have. Please note that some leasing companies will not allow you to sell the car prior to the expiration of the lease. Also, be aware that your leased car might not be eligible for trade-in tax savings. Check with your leasing company for complete details.

That means that in some cases they can buy a leased car, but they have to contact the leasing company. There is no guarantee that they can buy your car, or that you will get enough money to make it worth your while. The bulk of the money will be sent to the original leasing company

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Your discussions with CarMax must have missed an important point.

In order to end the lease early, you must buy the car. You need to contact the leasing company (or log into your account, presumably Honda Finance) and view the buyout price. This is not the same as the residual value. You can approximate the buyout with this formula:

Buyout = Residual Value + (Num payments remaining * Monthly Payment)

In your case your Buyout would be approximately: $15,500 + (14 * $180) = $18,020. Note it might be slightly less than that due to an interest adjustment.

If you sell the car to CarMax for $16K, you will have to put up about an addition $2K to get out of the lease. (You will not be getting a check for $500.)

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As Justin Cave says, you can't sell a car that you are leasing, because you don't own it. Yes, CarMax will buy a leased car, but they won't buy it from you, they will buy it from the company you are leasing it from. There is a lot of paperwork and negotiations involved, which means that there's a lot of people taking a cut, and it means that some random person off the street is unlikely to be able, let alone willing, to deal with this. So unless you think someone in the car industry will see your Craiglist ad, that is not a good way of doing this (and ethically, you should clearly disclose in the ad that you are not the owner of the car). If you're going to do this, you should shop around to different dealers to see who will give you the best deal, but the complexity of this deal does mean that there isn't going to be much competition for your business, and as I said before, there will be a lot of transaction cost. You should also contact the company you are leasing from and see whether they're willing to beat CarMax's offer.

While Pete B.'s answer was rather rude, they do make several important points. You are abandoning what little equity you have built up in your current car to take on a significant liability, and have expressed a desire to avoid current cash payments in favor of future payments, a strategy that generally results in high interest payments. Getting a new car every two years is a rather large financial drain. The one bright point is that the cars you mention are on the lower end of cost.

  • It's not hard and there's no negotiations. There's no people taking a cut. It's essentially identical to a car with a loan on it. The buyer calls the finance company and get the payoff amount and the address. After ensuring the selling price is greater than the payoff amount, the buyer sends a cashier's check or wire with the entire sale price to the finance company. The finance company sends the buyer a clear title and the seller a check for the amount in excess of the payoff value. – user71659 Apr 26 at 0:44
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One thing I like about your question is that you clearly state your goal. Its refreshing that your goal is to drive a certain collection of cars, and you are abandoning all pretense of making smart financial decisions. Its nice to see a new grad that realizes they are killing themselves, financially, by leasing new cars.

If I was in your shoes and had your goals, I would go to a couple of Honda and Mazda dealerships and see if they can cut deals that meet your criteria. Sure you can try CarMax, but I think you would be better off playing the dealerships off of one another. Depending on how well you negotiate and what your priorities are is how close you will get to the stated parameters.

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