Best leased cars to buy back and sell for profit

Business

Lessees can take advantage of record used car prices that are substantially higher than calculated residual value

A Volkswagen Tiguan on display at the North American International Auto Show in Detroit. (AP Photo/Tony Ding)

  • The average three-year-old used car is worth 31.5 percent, or $7,019, more than its residual value estimated at the beginning of its leasing term
  • The vehicle that is worth the most compared to its predicted price is the Volkswagen Tiguan, with a 61.3 percent or $8,677 increase
  • Because the market value of leased cars is substantially higher than their residual value, lessees can buy the car at the end of their lease term and sell it for a profit

Heightened demand for used cars in the wake of the microchip shortage and the COVID-19 pandemic has led to record high used car prices. While high prices and diminished inventory has created a difficult market for car buyers, consumers who are at the end of their car leases can likely buy their cars and sell them at a substantial profit. 

According to iSeeCars.com’s latest analysis of over nearly 10 million car sales, the average three-year-old used car is worth 31.5 percent, or $7,019, more than its residual value estimated at the beginning of its leasing term. iSeeCars compared the projected three-year residual values of new cars from 2018 to current used car prices for three-year-old cars to see which can likely be purchased at the end of their lease term and sold for the highest profit.

“Dealers calculate a vehicle’s residual value based on its projected depreciation, and this value is locked in at the beginning of a car’s lease,” said iSeeCars Executive Analyst Karl Brauer. “With used car prices at record highs, the market value of leased cars is substantially higher than their residual value, which means that lessees can buy the car at the end of their lease term and sell it themselves for a significant profit.” 

Leased Cars to Buy Back and Sell for the Highest Profit 

iSeeCars determined the top 15 three-year-old vehicles that have the largest difference in value  over their predicted price. These cars’ differences are 1.5 to 1.9 times more than the average vehicle. “While all vehicles are worth more than predicted three years ago, these are the cars where the difference between their current value and predicted value is the most significant,” said Brauer.

Leased Cars to Buy Back and Sell for the Highest Profit  – iSeeCars Study
RankVehicle$ Market Value Increase Over Predicted Value% Market Value Increase Over Predicted Value
1Volkswagen Tiguan$8,67761.3%
2Dodge Charger$11,80655.9%
3Chevrolet Camaro$12,34652.9%
4Nissan Altima$6,22849.4%
5Volkswagen Passat$6,40049.3%
6Chrysler 300$8,08449.2%
7Nissan LEAF$6,16748.3%
8Chevrolet Malibu$6,39248.2%
9Hyundai Elantra$5,31947.9%
10Mazda MAZDA6$7,19346.8%
11Kia Forte$4,91346.7%
12Jeep Compass$7,16346.4%
13Jeep Cherokee$7,41846.3%
14Nissan Versa$3,96146.1%
15Ford Expedition$15,83045.8%
Overall Average$7,01931.5%

The off-lease vehicle with the greatest difference from its predicted price is the Volkswagen Tiguan, with a 61.3 percent or $8,677 increase. “The Volkswagen Tiguan more than doubled in sales in 2018 over 2017 thanks to a redesign that included more space and a third row of seats, and it has grown in sales each year since,” said Brauer. “When its residual value was estimated in 2018, it wasn’t in as high demand as it is today.”

Two American performance cars earn the next two spots: the second-ranked Dodge Charger muscle car and the third-ranked Chevrolet Camaro sports car. “Sports and muscle cars saw a surge in popularity during the pandemic as buyers sought fun cars to combat boredom, and the Camaro was among the used cars with the highest price increases over last year,” said Brauer.

Eight sedans make the list, including the midsize Nissan Altima, the midsize Volkswagen Passat, the full-size Chrysler 300, the midsize Chevrolet Malibu, the compact Hyundai Elantra, the midsize Mazda Mazda6, the compact Kia Forte, and the subcompact Nissan Versa. “Sedans typically don’t hold their value well, due to lowered demand for the segment because of consumer preference for SUVs,” said Brauer. “The shortage of used car inventory and price increases amid the microchip shortage, as well as consumers looking for more affordable vehicles during the pandemic, may have heightened the demand for sedans.”

The Nissan LEAF electric vehicle also makes the list, with a 49.2 percent increase of $8,084 over its predicted 2021 price. “The 2018 Nissan LEAF featured a significant bump in EV range, performance improvements, and an exterior facelift, so current off-lease models hold their value better than the previous generation,” said Brauer. “Historically, EVs like the Nissan LEAF depreciated rapidly, but elevated gas prices and increased EV adoption among consumers has further helped the LEAF hold its value.”

Two compact Jeep SUVs make the list: the Jeep Compass and the Jeep Cherokee. “The Jeep Compass and the Jeep Cherokee have declined in popularity and typically don’t hold their value, likely due to consumer preference for other models within the Jeep brand,” said Brauer. “However, the shortage of used cars brought consumers to these vehicles when they may have considered other SUVs during normal market conditions.”

Rounding out the list is the Ford Expedition full-size SUV. “The Ford Expedition saw a 58 percent increase in sales in 2019 over 2018, and full-size SUVs continue to be a high-demand vehicle segment thanks to their flexible seating and cargo capacity,” said Brauer.

Leased Cars to Buy Back and Sell for the Highest Profit: Most Popular Cars

iSeeCars also analyzed the 24 best-selling new vehicles of 2020 to see which have the highest value compared to their predicted price. 

Leased Cars to Buy Back and Sell for the Highest Profit: Most Popular Cars – iSeeCars Study
RankVehicle$ Market Value Increase Over Predicted Value% Market Value Increase Over Predicted Value
1Nissan Altima$6,22849.4%
2Jeep Cherokee$7,41846.3%
3Ram Pickup 1500$10,49342.5%
4Honda Accord$7,05640.6%
5GMC Sierra 1500$12,60940.2%
6Chevrolet Silverado 1500$10,83039.0%
7Mazda CX-5$6,64037.6%
8Ford Explorer$8,96136.3%
9Honda Civic$5,23136.3%
10Ford Escape$5,56836.2%
11Ford F-150$10,81135.5%
12Toyota Camry$5,93434.8%
13Toyota 4Runner$10,34834.0%
14Jeep Wrangler$8,84632.6%
15Jeep Grand Cherokee$8,17432.2%
16Chevrolet Equinox$5,39832.1%
Overall Average$7,01931.5%
17Toyota Corolla$4,13430.5%
18Honda CR-V$5,68628.5%
19Nissan Rogue$4,74827.9%
20Toyota RAV4$5,05226.4%
21Subaru Forester$4,98025.6%
22Toyota Tacoma$7,18125.5%
23Subaru Outback$4,90522.8%
24Toyota Highlander$4,76816.8%

“The demand for these already in-demand vehicles has heightened amid the microchip shortage,” said Brauer. “The vehicles with below average differences between predicted price and actual price are vehicles that have consistently held their value well thanks to factors including reliability, safety, and low ownership costs.”

Leased Cars to Buy Back for the Highest Profit By Bodystyle

iSeeCars compared bodystyles to see which have increased in value the most compared to their predicted price.

Leased Cars to Buy Back for the Highest Profit by Bodystyle – iSeeCars Study
Bodystyle$ Actual Price – Predicted Price % Actual Price – Predicted Price
Coupe$10,65242.7%
Sedan$6,98340.4%
Pickup$10,58637.4%
Minivan$7,62732.4%
Overall Average$7,01931.5%
Wagon$4,38031.2%
Hatchback$4,56526.9%
SUV$6,02526.0%
Convertible$5,92320.6%

The coupe is the bodystyle that has the highest value compared to its predicted price, while the convertible has the smallest difference. “Sports cars surged in popularity during the pandemic, and the disparity between coupes and convertibles is likely because coupes are generally in higher demand than convertibles and convertibles tend to depreciate more because they are more expensive,” said Brauer.

The other segments with above-average value increases include sedans, pickup trucks, and minivans. “Pickup trucks have been in high demand due to the shortage of new pickup trucks and because consumers are willing to pay high prices on used versions when they require them for work,” said Brauer. “Conversely, sedans and minivans are segments that typically don’t hold their value, but consumers are willing to pay higher prices for them in today’s market.” 

“Consumers who are nearing the end of their lease should look at the details of their contracts to see their car’s residual value and should compare that to the car’s current market value,” said Brauer. “If their car has a substantially higher market value, they could purchase the car and sell it themselves for a major profit. They could also use that equity toward another lease or vehicle purchase, but selling the car on the private market would be the most lucrative option if possible. Consumers should also remember that selling their leased car for a higher-than-predicted price could be offset by buying their next vehicle for more than it would have cost, pre-pandemic.”

A consumer can find a car’s estimated market value through online tools like the iSeeCars free VIN check.

More from iSeeCars.com:

Methodology

iSeeCars.com analyzed over 1.1 million new and used car sales to estimate projected three-year depreciation for new cars in 2018. It then applied these projected three-year depreciation values to a sample of over 7.9 million new car sales to obtain predicted three-year residual values. Finally, it compared the predicted residual values to average used car prices of over 760,000 model year 2018 cars sold in May – July 2021. The models were ranked by the percentage difference between the predicted residual values and average used prices, and these differences were also aggregated at the bodystyle level.

About iSeeCars.com

iSeeCars.com is a car search engine that helps shoppers find the best car deals by providing key insights and valuable resources, like the iSeeCars free VIN check reports. iSeeCars.com has saved users over $306 million so far by applying big data analytics powered by over 25 billion (and growing) data points and using proprietary algorithms to objectively analyze, score and rank millions of new cars and used cars.

This article, Best Leased Cars to Buy Back and Sell for Profit, originally appeared on iSeeCars.com. 

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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