Soaring Used Car Values Leaves Milton Man Paying Extra to Buy Out Lease
MILTON (CBS) - Ed O'Donnell, of Milton, took great care of his 2018 Nissan Rogue, so when the lease was ending, he wanted to buy out the lease to take advantage of the soaring value of used cars.
"Here's the buyout that we agreed to in our original contract with them, $15,657," he said, pointing to the paperwork from the dealership.
O'Donnell's plan was to trade the car in at a different dealership to buy a new car.
The Kelley Blue Book value was about $21,000, so even with the taxes and fees included in his contract, he was looking at a nice little profit. "That gives us $2,000 down on a new car," he said.
"People are going to see for the first time, ever, that car that's been sitting in their driveway, that they've put some miles on it, is actually worth more today than the month prior, the year prior," explained Ivan Drury of the car shopping site, Edmunds.com.
According to Drury, the shortage is partly due to the lack of computer chips needed to build new cars. He said rental car companies are also so desperate to increase their fleets, they too are buying used cars. That combined with the idea that some are still wary of public transportation because of the pandemic means prices are skyrocketing. "Year over year, you are talking about a 30% increase in used car values."
But O'Donnell was stunned when he went to the dealership to cash in on that extra value.
"I was beside myself. I was so angry," he said, pointing to a $1,579 lease buyout fee that was a total surprise. "They said because of COVID and because of the shortage, there's nothing we can do. That's our policy," he said, adding that nothing about the fee was in his contract.
When we contacted the dealership, they denied the fee had anything to do with COVID They also said it was within their right to charge the fee.
O'Donnell hopes his story will at least make dealers think twice. "I'm hoping this sparks something where all of a sudden, dealerships go, 'Oh wait, we can't just surprise people with mysterious fees out of nowhere.'"
According to the experts from Edmunds, the takeaway here is to shop around. When you are buying out a lease, you don't have to return it to the same dealership where you got the car. Many dealers don't charge a buyout fee at all. Ivan Drury told us a little legwork could save you some real money.
