Maximizing cash-out of positive equity at end of my Rav4 lease


Hi - I am first-time lessee, approaching the end of my lease on a 2015 Rav4 Limited, and need some advice on the most optimal way of cashing-out the positive lease equity I think I have in it.

We have not put many miles on it, and it’s in great shape. The residual in the contract is about $19k, and while KBB only puts the trade-in value at around $20k, the private party value is listed at $22k and I see cars identical to mine posted for sale all over the internet for $24k.

If I ask a dealer to roll positive equity into my next transaction, I’m afraid it’ll only be around a $1k credit. It seems to me the obvious move here would be to buy the car myself at residual value and then sell it myself on the private market so I can pocket the most cash possible, then roll some or all of it into my next transaction as a down-payment. However, I don’t have $19k in liquid funds to make that happen, and I also don’t want to pay NJ sales tax on the buy-out… (First-world problems, I know.) Any ideas?

It seems to me that lease-swapping websites (or even the market forum here) seem to focus on swapping leases mid-term, not dead at the end of the lease. In any case, I’m thinking the customer I need to reach is really a used car buyer, not someone looking to assume a shortened lease, but the problem is I need a buyer who won’t mind paying off the leasing company for me (whereupon presumably they would send the title to me and not the buyer). A lot of trust would be required. Anybody know of an online service to facilitate this kind of transaction?

Thanks for any help!

  • Andy

Check carvana, carmax and one other site I’m forgetting for their instant offers. That’s pretty much the best bet to sell to them

Vroom… 2022020202202

Check if the finance co will release the title to a third (private) party. That’s a long shot but your only way to sell it for the highest theoretical profit.

I’ve said it before, equity at the end of a lease is mostly a mirage.

Pocketing the most equity may not be hard at all. You’re going to need the private party buyer to pay off your lease. Hopefully, it’ll be simple and Toyota will let him do that without charging the tax (that is largely determined by what state you’re in). If Toyota will send the title (or lien release) to your buyer, it’s even better. If not, it’s not that big a stretch to tell the buyer you’ll give him the title/lien release once it comes to you. What are you going to do with it? He’s got the car and can prove he paid for it.

You’ll want to get this wrapped up before the lease ends, otherwise you’ll need to extend the lease and maybe pay registration renewal fees. Find out what the car is really worth before you spend too much time finding out you’re too high. KBB tends to be optimistic. Get bids from Carvana and Vroom, maybe the buyers that KBB will offer, or call a few Toyota dealers. Once you know the wholesale market on the car, try for maybe $3K more and settle for $1,500-2,000 more as needed.

If the above is doable, give Toyota your permission to verify everything with the buyer. They might need you to be on the line. You have the buyer generate a cashier’s check for the payoff and you both watch it go into a FedEx envelope to Toyota. Give him the car.

Done this many times. Snow big deal.

Don’t forget the tax credit in NJ for trade-ins. So a $20k trade gets you up to $1400 in tax savings. That means you need at least $21,400 selling outright to be equivalent.

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Interesting thought. Is wagnerandy in a state that only charges tax on the difference? If so, what happens on a lease? Has the RAV4 had the tax paid on the whole amount already?

Clarify that you truly have equity. Get quotes from vroom and caravan. Might be easiest to just sell to them.

I doubt anybody in their right mind would pay 23k for a 4 year old rav 4 which does not have all the safety features a new one has.
A dealer would give you the trade in value which would be 19k.

What this allows you to do is exit the lease early without having to pay disposition fee possibly and get a good deal on another brand. Other than that, I don’t see you putting money in your pocket.

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Thanks to everyone for all the advice! I wasn’t aware of the tax credit on trade-ins mentioned so I’ll do some research on that, and get some offers on the car from the places you all have suggested. FYI, to answer one poster’s question, I am in New Jersey and I understood NJ sales tax was charged originally when I started the lease — I had that amount rolled into the monthly payment.

Are you sure? I don’t think NJ gives any tax credit for returning a leased vehicle.

Not talking about returning the leased vehicle. He is talking about trading it in, which means the dealer is buying it.

However, the taxes can get a bit convoluted. It depends if the buyout includes the tax or not. Some lenders will sell to a dealer without charging tax, but I’ve heard some won’t. Obviously, if there is a portion of the leased vehicle you have not paid tax on, then there is no credit to be had.

Since the dealer does not pay taxes on his purchase, no tax event is triggered and therefore no tax credit is obtained.

So then what are you talking about? NJ doesn’t tax the selling price so obviously the RV has not been paid tax on.

like i said in my message, sometimes the buyout includes the tax. I have seen it done both ways. So, while tax has not been paid YET, if the buyout includes tax, then you buy it for $19k, trade to the dealer, and voila, tax credit. And, no, you don’t have to buy it beforehand. You sign a power of attorney form at the dealer just like any trade-in with a lien. This is exactly why I wrote “IF” the buyout includes tax or not.

Btw, while I still haven’t acted on this, a Toyota Financial rep ultimately told me that my best bet is to find a buyer and then use a bank (presumably the bank through which the buyer is financing the purchase), and ask the bank facilitate the transaction, if they’re willing. TFS would be able to release the title to the bank (they otherwise cannot release it to an individual other than me, unless it’s a dealer or bank) who would meanwhile cut the checks to the appropriate parties and distribute the title to the rightful buyer. The bank is not a retail purchaser so we would avoid double sales tax the same way that a dealer does.