I am looking into an option to flip a leased car at the end of my lease this summer, but I am afraid I am missing something that would kill any potential profit and make the whole thing not worth the effort.
I have 2015 Honda Civic EX with ~27k miles and I basically see two options:
Turn the car in when the lease is over, pay a disposition fee (I think, $400 or so), potentially pay for some minor damages that might be beyond wear&tear (? another $300-500+)
Pay the car off and sell it
Currently Honda account info shows my Payoff Amount as ~$13800
I am looking at Carmax website and Honda Civic EX with that kind of mileage is offered locally for $15-16k on average.
Now my main question is what other “hidden” costs I might incur if I pay this car off and decide to sell it? And my main concern is around sales tax - if I pay this payoff amount, will I also have to pay a full sales tax on it (I live in PA, I guess it’s 6%, so that will effectively bring my payoff amount with tax to $14600+ which is already quite close to what these cars are sold for). Is there a way to avoid paying a tax for the car and leave this for a private buyer?
Sorry if these questions sound naive - I never sold a car before in the US (well, as a matter of fact, I never sold a car myself anywhere), so I’m curious what pitfalls I may encounter in the process.
And - probably the most important question - do you think the whole thing with selling a leased car makes sense at all or is it just a waste of time and just assuming unnecessary risks? Any other options I should look into? (e.g. swaplease for the last few months etc?)
I think you are overthinking this, people do this all the time.
Just go to Carmax with your payoff and if they offer more than that, they will just write you a check for the difference.
It makes sense when you have equity in the car, i.e. the value of the car exceeds the payoff by enough to make it worth your time. Unfortunately I doubt it in your case.
Your best bet, if you are buying/leasing another Honda, is to have the dealer purchase the car instead of process it as a straight up lease return. Then you will save on the Disp and damages.
Thanks! But what do you think is the best way to estimate it?
If I can sell it, let’s say, even for 14800 AND I don’t need to pay a sales tax, I can end up (at least in theory) with 14800 - 13800 = $1000 in easy money for literally doing nothing
If I am on the hook for the tax anyway the math becomes much worse as I will struggle to even make it break even.
I might just try to swing by Carmax next time I’m in Philly just to gauge some idea on what they can offer…
Yes, I think you are right, if I lease another Honda, I think they even waive the disp fee and have damage forgiveness up to $500 or so, but the problem is that I do NOT want another Honda ever again lol. But I’ll still leave it as the last option.
I highly doubt that to be the case, but you can research your own state’s tax guidelines to find out.
In 10+ years of perusing car leasing/buying forums I’ve only ever seen one state mentioned where it was possible to buy out your lease and re-sell it within 10 days to get the sales tax back.
Don’t expect them to give you 15 or 16k for your car to buy. They’ll go a couple thousand less than that to recondition and make a decent profit. You’ll honestly be lucky if they give you your payoff amount.
I have sold cars under lease to CarMax and to private party. You do not buy the car and then sell it. You would be paying sales tax killing the deal. The correct way is that the third party pays off the lessor and you get the rest of the money. Carmax knows how to do this. If you are selling to a private party, their lender should know how to do this. Especially are credit union.
How much do you think Carmax will give you if they’re selling at that price? I can probably guarantee it’s not more than $13000. Have you looked up your trade-in value on KBB or Edmunds yet? It’ll give you an idea of what your trade-in can be.
Unless you’re talking about selling privately, where you can probably get more money but will be a lot more work?
I don’t know what your problems were, but that generation of Civic was unfortunately not well regarded. The newest generation Civic is highly praised.
You are right, I ran it through KBB and Edmunds now and they both indicate Trade-In value of ~12k with potential private party sale being in 13-15k range. I might have well been too optimistic about it based on the limited research I’ve done so far.
From where it stands, I might give it an “honest try” to sell it for 14-15k without too much effort into it - if it sells - well, cool, at least I won’t need to pay disposition fee and damages; if not - I’ll just return it.
