SANTA MONICA, Calif.–Consumers and credit union members who have car leases due to expire soon are being urged to carefully explore their options, as a 2019 leased car, for example, is now worth an average $7,200 more than expected.
“Used-car prices are up 41.2% from a year ago, according to the most recent data from the Bureau of Labor Statistics,” noted CNBC. “If your three-year auto lease is coming to an end soon, be aware that your car may be worth far more than you realize.”
According to the report, data from research firm Edmunds.com show that the 2022 average trade-in value for 2019 model-year vehicles is 33% higher ($7,208) than the predetermined residual value.
"These values are completely different from what the residual value estimates were," Ivan Drury, senior manager of insights for Edmunds, told CNBC. "That's a good thing for anyone who's leasing."
As credit union lenders are aware, the ongoing global shortage of microchips continues to impede manufacturers' production of new vehicles, which has translated into demand outpacing supply. The Russia-Ukraine war could further disrupt the supply chain.
“Demand continues to spill into the used-car market, where prices are up 41.2% from a year ago, according to the most recent data from the Bureau of Labor Statistics,” CNBC reported. “The average price for 1- to 3-year-old cars is above $41,000, up more than 50% from $27,300 in January 2020 (pre-pandemic), according to car-shopping app CoPilot.”
Vehicles Appreciating Most
CNBC reported the Edmunds.com data show among luxury vehicles, the 2019 Lexus IS 300 tops the list for posting the biggest jump between its current trade-in value and the residual value it was assigned at the beginning of the lease. The car now fetches an average of $31,521 when traded in, 46% higher than the estimated residual value of $21,653, according to Edmunds.
For mainstream vehicles, the Ford Mustang has gained the most: Its average trade-in value is $29,215, which is 68% higher than its $17,363 residual value, CNBC said.
The report noted that for many consumers it makes sense to buy out the lease when it ends, as it is likely significantly less expensive than a new vehicle. The consumer also has the option of then selling the vehicle.
The report noted some automakers are restricting the practice and requiring leased vehicles to be returned to one of the brand’s dealerships.
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