Whether you're considering a lease for your next car or currently have a car on lease, you're probably aware that a lease gives you no ownership. Once the 36 months are up, you drive the car to the dealership's lot and walk away. Many dealerships processing end-of-lease returns neglect to mention an important detail at this point. In some cases, when a lease is returned, the car has equity on it worth hundreds or even thousands. It's called lease equity, and it's money that should go in your pocket.
When you lease a car, you don't get to drive it as much as you want. Rather, the lease is made out for a specific mileage level. Depending on the model and contract, you could be allowed anything from 30,000 miles to 60,000 miles in the three years that you keep the car.
If you go over your mileage limit, you are said to have negative equity in your lease. You are charged for overages when it's time to return the car at the end of the 36-month lease period.
Should the opposite happen -- if you manage to drive less than you're allowed -- you'll have ended up paying more for the car than you've actually used. It's this difference that makes up the equity that you have in your car. When the dealership sells the car on the used market, they are likely to get more than they originally hoped for. They should give you a share of this windfall.
Depending on the model and how many miles you've managed to save, you could have equity worth a substantial sum of money in the car.
Most dealerships don't pay cash for the lease equity that your car brings them. Rather, they offer to give you credit for what it's worth, should you decide to lease or buy a new car from them, or even if you decide to buy the car out, rather than return it.
Unfortunately, dealerships are often less than upfront about lease equity, and often fail to bring up the subject in the hope that their customers won't know enough to ask.
Before you hand in the key at the end of your lease, it's important that you look at the odometer and determine how many miles you've saved. If it's a substantial number, you should bring it up with the leasing department employee that you deal with. Doing so could save you a lot of money.