The microchip shortage has restricted new car production for over a year and is not expected to be fixed anytime soon. While consumer demand for new cars remains strong, vehicle supply is limited, causing new car prices to soar to record levels. According to Cox Automotive, the median price of a new car hit a record high of $48,043 in June 2022.
The shortage of new cars has also had a major impact on the used car market. With fewer new cars for sale, demand for used cars has increased, which has also caused used car values ??to reach record levels. For consumers who leased a car 2 or 3 years ago, the current value of their car is often thousands of dollars more than their own hire purchase Price obtained at lease inception using historical vehicle depreciation tables. According to Edmunds.com, the average 2019 model year leased vehicle is now worth $7,208 more than its projected final lease value, also known as the “salvage value.”
The buyback price for a car that was leased 2 or 3 years ago is often much lower than what the same car would cost at a dealer today. This has motivated many people to buy up their lease and use their car’s equity. This can be a smart strategy in today’s market as it can generate instant equity for the car that is already being driven daily and can help drivers avoid high prices for a new car lease or purchase.
Lease agreements vary by lender, but most lease agreements include a “call option” price, which is the residual value of the vehicle at the end of the lease term. Once someone has confirmed that their lease will allow them to purchase the vehicle at the end of the lease, they should ask their lender for a “buyout offer.” The lease buyout offer can often be accessed online through the lender’s customer portal. The buyout offer includes all applicable taxes and DMV fees in addition to the purchase option price and all remaining…