Due to the recent rise in used-car prices, people are purchasing their leased cars, only to have a quick turn-around by making a sale and pocketing the difference.
Lease prices are calculated using the estimated residual value of a vehicle, but even the industry experts couldn’t predict the semiconductor chip shortage or the COVID-19 pandemic when they set the prices three years ago, according to NBC News.
"The market is insane right now, and stimulus money plus fewer vacations are huge contributors to that," Rick Ricart, president of Ricart Ford, told Mega Dealer News. "The demand for used cars has soared as individuals had excess money to spend. Pent-up consumer demand for cars from 2020, plus excess money, plus lack of availability of new vehicles equals an abnormally expensive used-car market. We see the strong used-car market continue into 2022. Low new-vehicle supplies and high consumer demand should taper off midway through the year."
Ricart explains that a trade-in today is worth "30% more than it was a year ago, and we are willing to pay for it."
However, though the deal is tempting, drivers need to do some digging before buying out their lease with the intent to resell because laws vary state by state. And once they sell a car, that means they must buy a car in the same competitive market if they don’t have another car already.
Automotive dealers are struggling to find inventory to put on the market, and Ricart Ford is putting its energy into buying privately.
"With the wholesale supply levels suffering, we have been concentrating on private purchases and trade-ins," Ricart said. "We've made the majority of our marketing message to highlight competitive trade-in values and even amounts above the book values."
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