- The pandemic has driven used-car prices sky-high.
- Owners can cash in by buying their car at the end of a lease and flipping it on the used market.
- The models most ripe for profit include the Kia Forte and Jeep Compass, an iSeeCars study found.
- See more stories on Insider’s business page.
It’s not just dealerships that are profiting from today’s insatiable appetite for used cars. Amid an unprecedented shortage of vehicles on dealer lots, sky-high prices, and a buying frenzy, car owners can cash in big too.
Pocketing thousands of dollars can be especially simple for people whose leases are expiring. At the beginning of a lease, a bank, leasing company, or an automaker’s financing arm sets the residual value of the vehicle: the agreed-upon price that a customer can buy the car for at the end of a lease term, often three years.
Today, used-car values are so inflated (for a host of pandemic-related reasons) that some lessees can turn an instant profit by buying back their leased vehicle and flipping it on the secondhand market. Dealerships starved for inventory are willing to pay top dollar for used vehicles, especially ones with low miles.
According to automotive research outfit iSeeCars, the average three-year-old used car is worth 31.5% – more than $US7,000 ($AU9,567) – above the residual value estimated at the start of its leasing term. Coupes, sedans, and pickups have seen the largest jumps in value, the site found.
“This is kind of unprecedented to see such a widespread, no-brainer way to make money on a car,” Karl Brauer, executive analyst at iSeeCars, told Insider.
iSeeCars analyzed nearly 10 million car sales to determine the 15 2018 models people should buy at the end of their lease to flip for the biggest profit. Check out the list below: