Honda Lease Equity Help

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Hey guys! first post here. I have a lease ending soon and am trying to be smart about it by research my options to figure out the best course of action.

Deets:
2019 Honda CR-V Touring
Black interior and black exterior
24,500 miles
Excellent condition
5 payments left

I looked up its value on KBB and it shows around $35,000. The residual price on my lease is $22,000.

If I’m understanding this correctly, that means I have $13,000 in equity. That seems like a lot compared to examples I’ve been reading about.

So was wanting to pick folk’s brains here and see what people thought I should do to utilize the equity well.

I really like the car, should I consider buying it out using my local credit union to get a good loan rate? is there a way to get the car and still somehow use the equity?

Are there other options for lease-end that people would recommend here? Thanks for the feedback!

2

The residual value is the buy out at the end before taxes and fees. With 5 months left and the need to pay taxes, it’s going to be a couple grand lower than that. Also, KBB value is irrelevant. You need to compare pricing against people that’ll actually pay you money; Carvana, carmax, rodo, your friendly neighborhood dealer, etc.

Your other option is to sell the vehicle to a honda/acura dealer or someone that can facilitate the buy out through a honda/acura dealer. Then sales tax doesn’t come out of the equity amount, but you’re more limited on who you can cross shop for offers.

3

Your equity will be

A. What a dealer actually offers you, not a theoretical KBB value.

Less.

B. Your current buyout amount, which is approximately RV + remaining payments - some finance charges.

Once you have this real number, you can start a real discussion about what to do with it.

Or take advantage of the option to buy it well below market value (can finance it with an auto loan if you want to).

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4

Wish you were on the East Coast we buy all Honda/Acura leases as a third party dealer.

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5

“Or take advantage of the option to buy it well below market value (can finance it with an auto loan if you want to).”

This is an option I’m heavily considering as,

  1. I really like the car
  2. is has low miles and is in good condition
  3. the residual/buyout price is super low

This is where it gets confusing for me. So If I went that route, I would essentially be getting a very nice used car for a very low price; way under market value. However, there would be no realized gains from having all this extra equity, as the equity would still be in the car? I guess the equity would simply be transferred to myself via having the car via an auto loan. I just wouldn’t be able to actually use it at the time unless I decided to later sell it.

Does this still seem like a good possible route?

6

Yah, buying it out isn’t a bad option.

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The OP can go with cash offer from KBB. The question is what is he going to drive after that?

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8

There would be no realized gains, no. However, if you sold it and tried to replace it some of those realized gains would go into replacement cost of new vehicle due to hot market right now.

You have to figure out how much a replacement vehicle would cost to really know what the best option is.

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9

Correct, unless you really need the money, you can just leave the equity in it. If you really need to extract it, your only option is to sell it but then you’ll end up needing to buy something else at a high market value. If you like the car, just buy it and keep it.

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Yup, just like your house or your stocks: gains are realized when you sell.

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