When Is the Best Time to SELL your Car?

Posted Thursday, Sep 30, 2021

Much has said about, when is the best time to buy a car? Buyers are always looking for a way to game the system and save money on major purchases. Much of this thinking revolves around zeroing in on the best time to purchase a particular item. Need a new TV? Shop on Black Friday or around the Super Bowl. Flying somewhere? Buy your plane ticket on a Tuesday and fly out on a Wednesday.

There are as many theories on this topic as there are days in the year. Initially, I want to share and chime in on when is really the best time, but due to the current state of the market as of this writing May 1, 2021; what I want to share with you when is the best time to sell your car. . .

NOW is the best time to sell your car! And here’s why.

The COVID-19 pandemic has affected vehicle production worldwide and brought factory closures, limited staffing and a global shortage in semiconductor chips that are essential components in a modern vehicle. As a result, fewer new vehicles are available on dealer lots. According to Edmunds analysts, new vehicle inventory at dealerships nationwide was down by 36% in March 2021 compared to a year ago, and prices are rising for both new and USED VEHICLES as a result.

Rising used car values offer a chance to get out of a lease, get out of a loan on a car you and your family have out grown even that car collecting dust in the driveway and pocket some cash.

I haven’t seen used car prices go up this much in years, there is a large percentage of leases with equity in them as well automobiles purchased with a conventional auto loan.

A friend of mine recently asked me to help him buy a new car as his lease is up, he intends to return the lease and pay the disposition fee and potential excess wear and tear charges and get another car, gathered some more information and advised him to sell his car, he ended up with $4,894.00 in his pocket after paying off his Toyota Camry.

In another situation a good friend who has a $22,590.85 payoff for his Honda Odyssey got $4,325.15 in his pocket! Talk about a car being a depreciating asset. Weird times were in.

Know where you stand

Here’s how to know if you have equity in your leased or purchased car:

Find the residual value in your lease contract. This is the amount you can buy the car for at the end of the lease (there might also be a disposition fee for this transaction).

Get the buyout price. Call the lease holder and ask for a current buyout price. You can usually estimate this price by simply adding the total of all the remaining payments to the residual value.

Look up the current market value. Use an online pricing guide, such as Edmunds.com, Kelly Blue Book to find the trade-in value of your car, factoring in the current mileage, options and condition and accident reports.

Do the math. Subtract the residual value from the current market price or cash offer. This is an estimate of how much equity you have in the car and how much money you could make on the deal.

For a purchased vehicle. Ask your lien holder for a 10 day payoff and proceed to the next steps.

Opportunities in a volatile market

Once you know if you are in a positive equity position, you can explore different ways to use this potential value. Here are options to consider:

Buy your leased car yourself. If you do this, you’re essentially getting a good used car at below-market price. Also, you know the history of your car, so there are no surprises. Many lenders that refinance auto loans also offer lease buyouts.
Sell your leased car privately. Check online sources like Kelly Blue Book as I mentioned earlier this time check for private party sale values.
Trade in the car. While you could get less from this transaction as opposed to private party sales it’s often the easiest, fastest and safest way. Use the equity as a down payment on the new car and save on taxes and finance charges.

Stand to reason it is NOT the best time to buy a car! While used car prices went up, new car prices went up as well, some cars are currently being sold OVER the Manufacturer Suggested Retail Price (MSRP). 5, 10, 15 even 20 thousand over MSRP.

If the current market and your current situation is preventing you from buying another car here are options to consider:

(again)Buy your leased car yourself. If you do this, you’re essentially getting a good used car at below-market price. Also, you know the history of your car, so there are no surprises. Many lenders that refinance auto loans also offer lease buyouts.
Extend your lease. Many people don’t know that they could extend their lease on a month to month basis. All you have to do is call your lease holder and make arrangements to extend the lease until which time you can make the best decision for yourself.
Refinance your loan. For those who are currently on an unfavorable financing terms, it is easier to refinance with your bank or credit union as the lending values of vehicle went up as well. LTV (loan to value ratio) is often the culprit with denied loan restructure. Your chances of getting a lower monthly payment just went up.

There you have it, I hope this helps you make an informed decision is this volatile and uncertain car market. This is a time sensitive information and might not be applicable depending on when you read this post.

Cheers.