Lease-end equity, explained
The difference between your leased car's market value and buyout price when the lease term ends.
What it means
Lease-end equity happens when your leased vehicle is worth more at turn-in than the residual value (buyout price) stated in your contract. If the dealer set your residual at $18,000 three years ago but the car is now worth $21,000, you have $3,000 in equity. You can capture this by buying out the lease and immediately selling the car, or trading it in at a dealership. If you simply return the lease, you walk away from that money.
Why it matters
Most lessees assume they have no equity and just hand back the keys. That was usually true before 2021, but the used car market has been volatile enough that many off-lease vehicles now carry four-figure equity. Dealers know this and will happily buy your lease at turn-in, pocketing the difference if you don't ask. Checking your buyout price against current market value three months before lease end can put cash in your pocket or reduce the down payment on your next car.
What to do
Run the numbers before your lease matures. Compare your payoff quote to real offers from Carvana, CarMax, or local dealers. If you see equity, decide whether to buy out and sell yourself or negotiate a trade-in that reflects the full value. Our sell or keep tool helps you weigh the tax and transaction-cost implications of each path.
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