Buy It to Sell It, Turn-In Damage, and Financing After a Credit Hit

0:00 Hey everybody, welcome to Keys or Keep. I'm Joe, managing director at Champion Auto Finance. This is the show where we take your lease-end questions and work through the one decision that matters: hand back the keys, or keep the car.

0:13 Quick note before we start. The questions on this show are based on the kinds of questions people ask us. Names and details are changed. And nothing here is legal or tax advice. Your contract and your state's rules always win.

0:24 Three questions today. Let's go.

0:28 First up, we got a question from Maria in Florida. She says, Joe, my lease ends in two months. I really like the car, but I'm moving overseas next year, so I can't keep it forever. A friend told me I should buy it now and sell it, because it's worth more than my buyout. Is that a real thing?

0:42 Maria, it can be a real thing. But let's slow down and look at the pieces, because there are a few places it can go sideways.

0:48 Here's the idea your friend has. If your car is worth more than your buyout price, that difference is equity. When you return the car, that equity usually stays with the leasing company. If you buy the car and sell it, you may be able to keep some of it.

1:02 Now the pieces. One, find out your real buyout price. Call your leasing company and ask for your payoff in writing, with every fee listed. Two, find out what the car is really worth, and the best way is a real offer from a real buyer, not just a website estimate.

1:18 Three, and this is the one people forget, taxes and fees. Buying the car usually means paying sales tax or a similar vehicle tax on the purchase, plus title and registration. Those costs eat into your equity. Ask the leasing company and your state's motor vehicle office what applies to you.

1:36 Four, some leasing companies have rules about selling a leased car directly to a third party, like a dealer or an online buyer. Ask your leasing company what's allowed before you make plans. Don't assume.

1:47 So the math is simple. Take the real offer. Subtract the buyout price, the taxes and the fees. If there's still a meaningful amount left, buying and selling might be worth it. If it's close, it may not be worth the hassle, especially with a move coming.

2:02 And Maria, one more option. Since you like the car and you have a year, you could buy it, drive it, and sell it before you move. Just remember that a year of miles lowers what it's worth, so keep checking the numbers.

2:15 Next, we got one from Kevin in Illinois. He says, Joe, my lease is up in a month. I've got a dent in the rear door and I curbed two of the wheels pretty badly. I'm dreading the turn-in inspection. What should I do?

2:27 Kevin, first, you're not alone. Curbed wheels might be the most common lease-end confession we hear.

2:32 Here's how to think about it. When you return a leased car, the leasing company inspects it, and damage beyond normal wear and tear can mean charges. Your contract defines what counts as normal. A small door ding might pass. Badly curbed wheels often don't.

2:47 So you've got three paths.

2:48 Path one, return it as is and pay whatever they charge. Simple, but you don't control the price.

2:55 Path two, fix it first. Get quotes from a body shop and a wheel repair shop. Small dents can sometimes be fixed without repainting, and wheel repair is often cheaper than people expect. Then compare those quotes with what the leasing company would likely charge. Some leasing companies offer a pre-inspection before turn-in so you can see what they'd flag. Ask about that.

3:15 Path three, buy the car. If you buy it, there's usually no turn-in inspection, so there are no damage charges. The dent and the wheels are just yours now. That makes the most sense if the car is worth close to your buyout price and you were thinking about keeping it anyway.

3:31 One honest caution, Kevin. Don't buy a car you don't want just to dodge a repair bill. Run all three paths with real numbers, and pick the cheapest one that fits your life.

3:41 Last question today. This is from Tasha in Arizona. She says, Joe, my credit took a hit since I signed my lease. I had some medical bills that went to collections. I want to buy out my lease. Can I still get financing?

3:54 Tasha, thank you for asking this so openly, because a lot of people are in the same spot and don't ask.

4:00 The honest answer is, maybe. It depends on the lender, and nobody can promise you an approval before a lender actually reviews your application. But here's what lenders usually look at, so you know where you stand.

4:12 Your credit history and score. Your income and your other monthly debts. And the car, meaning its age, its mileage, and its value compared with how much you want to borrow.

4:23 That last part can help you. If your car is worth more than your buyout price, you're borrowing less than the car is worth, and that can matter to a lender.

4:31 Here are a few things you can do before you apply. Pull your free credit reports and check them for mistakes, especially on those medical accounts. If something's wrong, dispute it. If you can, put some money down, so you borrow less. And if someone with stronger credit is willing, a co-applicant may help, but only if they understand they're responsible for the loan too.

4:50 And be careful with offers that seem too easy. Look at the interest rate, the length of the loan, and the total you'll pay over time, not just the monthly payment. A longer loan can make the payment smaller and the total much bigger.

5:04 Alright, let's wrap it up. Three takeaways.

5:08 One, equity is only real after taxes and fees. Subtract everything before you get excited.

5:14 Two, damage at turn-in has three answers: pay it, fix it, or buy the car. Price all three.

5:20 Three, credit bumps don't automatically end the conversation. Clean up your credit reports, know your car's value, and compare the total cost of any offer.

5:29 If you've got a lease-end question, send it in at lease end live dot com, and it might end up on the show.

5:35 Champion Auto Finance helps arrange financing for drivers buying out their lease, nationwide. We are not a lender, and approvals and terms are subject to lender underwriting.

5:46 That's Keys or Keep. I'm Joe. Thanks for listening, and I'll talk to you next time.