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Buying Your Lease Out is a Great Idea Right Now, and Here's Why
Published 2/21/25
If you’re currently leasing a car, you may have heard that it’s a really good time to be ending that lease. Maybe someone’s told you that it’s a good option to buy out and keep your leased car—or even sell it.
We’ve talked about how to buy out a lease. But why is it a good time to do so?
Note: It's worth checking interest rates right now, since they are dropping as of Fall 2024.
Car values have been on a wild roller coaster since 2021. Several factors, such as chip shortages, supply chain disruptions, and fluctuating consumer demand, have contributed to unprecedented spikes in both new and used car prices.
In this article, we'll explore the dynamics of car values over the past few years, discuss why used car prices skyrocketed during COVID-19, and look at where car values stand in 2024 and heading into 2025.
Finally, we'll dive into when it makes sense to buy out your lease instead of returning the car and leasing a new one.
Used Car Values and Why They Matter in Lease Buyouts
If you’re in a 3-year lease ending this year, you signed your lease in 2021. At that time, your lender may have estimated that your car would be worth around $20,000 at the end of your lease term. That $20,000 amount would have been written into your contract as the buyout (or payoff) amount. And you drove away with your leased car, probably planning to just turn it back in at the end of your lease.
As you know, a lot has changed in the last few years. So, what’s different, and how do those changes impact your auto lease?
There are a lot of reasons why used-car values have risen, but it mainly boils down to supply issues and chip shortages (part of the tech that makes your car the modern marvel that it is). With manufacturers producing fewer new models, existing models on the lot—and on the road—are in high demand, with prices an average of $7,000 higher than they used to be. And, as a leased-car driver, that’s great news for you.
With today’s car market in mind, let’s break this down a bit. Your lender probably didn’t predict these kind of supply-chain shortages when they estimated that $20,000 buyout amount. And let’s say the market value of your car now—even after 3 years of driving—is $25,000.
This means your car is $5,000 more valuable than what your lender predicted. It also means you have positive equity in your car and, perhaps most importantly, it means you can make money off your leased car.
How can you do this? Put simply, you could buy out your leased car from the manufacturer at the payoff price and walk away owning a $25,000 car for only $20,000 (minus any taxes or fees). Or, you could sell the car for $25,000 and walk away with a $5,000 profit (again, minus any taxes or fees). Basically, it’s a win-win for you either way.
The thing is, manufacturers know this is happening, and they’re scrambling to keep their inventory and not lose money. Many companies have imposed stricter rules about buyouts for future leases (or banned them outright) and are trying to make it harder to buy out or sell a lease.
We say, take advantage of this situation while you can. Lease End can help you buy out or sell your car, for a fraction of the time, effort, and cost involved with doing it through a dealership.
An Overview: The Impact of COVID-19 on Car Values
The COVID-19 pandemic drastically changed the car market. Before 2020, cars were generally seen as depreciating assets. New cars lost value quickly, and the used car market remained relatively stable. But with the pandemic, we witnessed a sharp turn in this trend. Used car prices surged, and even new cars became harder to find and more expensive. Here’s why:
1. Chip Shortages and Supply Chain Issues
One of the main reasons for the rise in car prices was a global shortage of semiconductor chips. Modern cars rely on chips for a wide range of systems, from infotainment to safety features. Factories that produce these chips were hit by closures due to the pandemic, causing a significant drop in supply.
As a result, automakers were forced to scale back production. Some manufacturers even shipped cars without certain features just to get them to market. The limited inventory of new cars created a ripple effect, driving more people to the used car market, increasing demand, and driving up prices.
2. Increased Demand for Personal Vehicles
During the height of the pandemic, public transportation became less desirable due to concerns over health and safety. This led to a surge in demand for personal vehicles. People who had previously relied on buses, trains, or ride-sharing services like Uber and Lyft now sought their own cars.
This heightened demand for cars, combined with supply chain shortages, caused prices to spike. Many dealerships faced record-low inventories, forcing consumers to either wait months for a new vehicle or pay a premium for a used one.
3. Stimulus Payments and Low-Interest Rates
Government stimulus payments and low-interest rates also contributed to the rise in car prices. With extra cash in hand and the ability to finance a car at historically low rates, many consumers entered the market. However, the supply of cars could not meet this sudden increase in demand, further inflating prices.
The Roller Coaster Ride of Car Prices...and What's Next
2021-2022: The Peak of the Price Surge
By mid-2021, used car prices had risen by over 30% compared to pre-pandemic levels. Cars that were just a few years old were selling for close to, or even more than, their original sticker price.
Again, this surge was unlike anything the auto industry had seen before, driven by a perfect storm of chip shortages, supply chain disruptions, and increased consumer demand.
2023: Stabilization and Gradual Decline
As the global economy began to stabilize, chip production ramped up, and automakers were able to produce more cars. In 2023, we started to see a slow but steady decline in used car prices. However, they remained elevated compared to pre-pandemic levels.
One reason for the slower decline was the lingering effect of the supply chain bottleneck. Many consumers were still opting for used vehicles, especially as new car inventories continued to recover at a slower pace.
2024-2025: Current Car Values
As of 2024, car values are in a more stable place, but used car prices remain higher than what they were before the pandemic. New car production has largely recovered, but the market is still feeling the effects of the pandemic-era disruptions.
Some trends we’re seeing in 2024:
- Used car prices are gradually decreasing but remain above pre-2020 levels due to continued demand and inflation.
- New car prices are also stabilizing, though buyers may still face higher-than-average prices due to inflation and increased manufacturing costs.
- Interest in Electric vehicles (EVs) and hybrids has been fluctuating, on a rollercoaster of its own.
And perhaps most notable?
The Fed dropping interest rates as of Fall 2024; this can potentially lower your auto loan payment for a lease buyout.
Ok. So When Does It Actually Make Sense to Buy Out Your Lease?
With the ups and downs of the market over the past few years, deciding whether to buy out your lease or return your car has become a more complex decision. Here are some factors to consider in 2024 when making that choice:
1. Equity in Your Leased Vehicle
One of the key things to check is whether your leased car has equity. Lease contracts are based on a predetermined residual value (the expected value of the car at the end of the lease term). If your car is worth more than the residual value stated in your lease agreement, you could have equity.
Given the rise in car prices over the last few years, many lessees are finding that their cars are worth more than expected at the end of their leases. This equity can be leveraged by buying out the lease and selling the car for a profit, or keeping the car at a below-market price.
2. Increased Lease Payments on New Cars
If you return your leased vehicle and choose to lease or buy a new one, you may face higher monthly payments than before. This is especially true in 2024, as interest rates are higher than they were during the pandemic, and the cost of new cars remains inflated.
In this context, buying out your current lease could be a more cost-effective option, particularly if you’re happy with your car and its condition.
3. Avoiding the Leasing Merry-Go-Round
Leasing a new car typically means entering another cycle of payments. While leasing offers flexibility and lower monthly payments, it can also feel like a never-ending loop of obligations. If you want to break free from this cycle and build ownership in your vehicle, buying out your lease might be a better financial decision.
4. Vehicle Condition and Mileage
If your leased car is in good condition and hasn’t exceeded its mileage limits, buying it out could save you from potential penalties. On the other hand, if your vehicle has sustained damage or you’ve exceeded your mileage cap, you might be on the hook for costly fees. In such cases, buying out the car could be a smarter financial move than paying excessive penalties.
5. Familiarity and Comfort
Sometimes, the best reason to buy out your lease is simply because you love your car. If it’s been reliable, you know its maintenance history, and it fits your lifestyle, buying it out can offer peace of mind compared to starting fresh with an unfamiliar vehicle.
Next Step: Moving Forward
When deciding whether to buy out your leased car or return it and lease a new one, it’s essential to consider factors like equity, the current cost of leasing or buying, and your personal preferences.
In many cases, buying out your lease can be a smart financial move, especially if your car has appreciated in value. But ultimately, the right decision depends on your unique circumstances, including how much you love your car and how much you’re willing to pay for a new one.
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About the author
Sarah Williams
Sarah loves breaking down complex topics and making them accessible to everyday readers. With four years of experience writing in the fintech and auto industries, she’s helped shape Lease End’s voice and given consumers the confidence they need to tackle leasing topics.
Lease End's mission is to empower auto lease owners with the technology to easily exit their lease. If you'd like to learn more about the lease-end options available to you, please don't hesitate to contact us. Our expert advisors are always prepared to answer your questions and are committed to finding the right plan for your individual needs.
©2025 Lease End
©2025 Lease End
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