If you're heading to the dealership to turn in your leased vehicle, it's smart to check its value. If you don't, you could be walking away from thousands of dollars in cash. That's particularly true now for owners of traditional SUVs and trucks of all kinds.

"That money, that equity, is yours. Period," said Oren Weintraub, president of Authority Auto, a concierge car-buying service. But not everyone knows that.

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Leasing companies predict what cars will be worth at the end of the lease term. This is the residual value, and that's the basis of the lease calculation. It is also the amount for which you can buy the car at the end of the lease.

What Creates Leased-Car Equity?

Leasing companies are pretty good at predicting that residual value. But because of fluctuations in the marketplace, some vehicles might be worth more than the residual value. Since you have the right to buy the car at the end of the lease term, you can profit from the lease company's inaccurate lower estimate. If, on the other hand, the car is worth less than the residual amount, you can turn the car in without incurring an extra expense.

Dianne Whitmire, fleet and internet director for Carson Toyota in Carson, California, said she uses the equity in returning lease cars to help her customers in a variety of ways. She had one customer with two cars — one was a leased car with equity and one a purchased car that was "upside down," meaning that the loan balance was greater than the car was worth. "In that case, one washes the other" to pay off the loan, she explains.

In many cases, customers use the equity in a returned lease car as a down payment on their next car (either leased or purchased) and consequently find the monthly payments for that car are lower than those for the leased car they just returned.

Not all returning leased cars have equity, of course. But as your lease return date draws near, keep an eye on its market value.

As an example of what is at stake when a leased car has equity, Weintraub recounted this story: A client's Mercedes-Benz SUV was near the end of its lease and the turn-in situation was not ideal. The car had minor body damage, and the client was going to pay $1,800 in excess mileages fees as well as a $400 disposition fee, which some leasing companies charge at the end of leases. By arranging to sell the car to a dealer, the client incurred none of those expenses and actually pocketed $3,200 in equity. The client was in shock at the windfall, Weintraub said.

The used-car superstore CarMax is another place where you can go to get equity from a leased vehicle. In most cases, you can sell your leased car to CarMax in almost the same way as any other financed car, according to the company. It will appraise the car or truck, then contact the leasing company for a payoff quote and process any equity you might have. CarMax notes that it's important to check your lease agreement for details. Some don't permit such sales.

Do I Have Equity in My Lease?

If you want to make use of possible equity, your first stop is Edmunds' Appraise Your Car page. There, you can get the trade-in and private-party values of the car. Next, find the residual value in your lease contract. Subtract the residual value from the current market value and this is the approximate equity you may have, subject to negotiation with the dealer. Knowing the Edmunds True Market Value (TMV®) current market value of your leased car, and even providing printouts of the price to the dealer, will strengthen your negotiating position.

If your car is a year or more away from the end of the lease term and you want to check for current equity, call your leasing company and ask for a buyout price. Subtract the buyout price from the current market value of the car to see if you have equity.

3 Ways to Turn Equity Into Cash

If you have equity in your leased car, here's how to turn it into cash. Keep in mind, though, that this is advanced car financing:

1. Sell your leased car and get a check. You can take your car to any dealer, not just the one where you arranged the lease, and let the dealer buy the car at the trade-in price. You can find that price in the Edmunds TMV pricing. The dealer will pay the leasing company what you owe and give you a check for the equity. However, Whitmire cautions, don't expect the money immediately. The dealership will mail you a check once it gets a clear title, assuring that your car doesn't have a passel of parking tickets attached to it. You also should put the agreement in writing and state the amount due to you, Weintraub says.

2. Sell your leased car to a neighbor, friend or family member. This method requires a bit of trust, so it helps to sell your car to someone you know. But this will work with any buyer you find, and it will get you the private-party price for the car, which is higher than the trade-in price dealers pay.

Here's what you do: After finding a trusted buyer, have that person mail a check for the buyout amount to the leasing company. Once you receive the title (the leasing company will only send it to the person leasing the car), sign it to release your interest in the vehicle, and give the title to the buyer. The buyer can then register the car and pay sales tax at that time. Be careful here, however: If the buyer waits longer than 10 days, the state might try to charge you both sales tax, which would wipe out your profit.

A way to prevent this, according to the Auto Club of Southern California, is to pay the sales tax and DMV fees as soon as possible and then return to conclude the deal with the title in hand. This transaction is called a "lease buyout transfer." Contact your state's DMV for more details.

3. Use it as the down payment on your next car. In this scenario, the equity in your current car becomes a cash down payment for the new one. Once you know you have equity, you can take your car to any dealer to begin a new lease or sales contract. Negotiate just as aggressively as you normally would. Not all dealers will offer you the same amount for your leased-car buyout, so you might have to shop around for the best offer. It should be close to the Edmunds trade-in price.

Weintraub said you might get more money if you are going "brand to brand," meaning selling a Toyota to a Toyota dealership, although any dealership can handle the transaction.

It's still important to make sure all the numbers add up, however. Agree on the exact amount of equity you will receive and look for that amount in the down payment box on the contract. Alternately, you can also use the equity to pay the fees required to begin a new lease rather than pay that money out of pocket.

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