Lease to own car: How to buy out your lease
If you are enjoying your leased vehicle and dreading the thought of returning it to the dealership, a lease buyout may be a good option to consider. What is a lease buyout? A lease buyout, sometimes referred to as a purchase option, allows you to purchase the car at the end of the lease instead of turning it in if your lease contract permits it.
Whether or not buying out a leased car is the right move depends on a lot of factors.
Mainly, you should consider the costs associated with a lease buyout and compare them with the cost of purchasing or leasing a different vehicle.
Wear, tear, and mileage can affect the value of the car, which you should keep in mind when considering a lease buyout. It may not be a good idea to buy out your lease if it's going to cost you more than the car is worth, which can happen if the car's actual value falls below the amount that would be required to buy out the lease.
You may be able to purchase the same year, make, and model for less elsewhere. Or, you may find the same car for the same price, but in better condition. That being said, buying a leased car can be a more streamlined and simpler way to owning a car, since the vehicle is already in your possession and you won't have to spend time shopping around or test driving.
How do you buy out your lease?
Many finance companies offer drivers lease buyout options they can exercise once their lease is up, sometimes sooner.
The lease contract should detail your lease buyout options and the price, or method for determining the price, that would have to be paid to exercise the lease buyout.
Your leasing company may communicate to you your lease-end options toward the end of the lease. Before deciding to buy out the lease, you may want to check out other car buying options. Though it can be convenient to buy out a car you've gotten used to, you may be able to save money on the same make and model at a different dealership.
If you're wondering how to buy your leased car or how you plan to pay for it, get in touch with your dealer or lessor. There are finance options in the market designed specifically for lease buyouts that may work for you.
5 steps to buying your leased car:
- Determine the buyout amount or purchase price, if available, by looking at your lease and contacting your lessor.
- Evaluate the car's wear, tear, and mileage. Factor in how much (if anything) this could cost you.
- Shop around; you may find the same vehicle at a better value elsewhere.
- Apply for financing if needed.
- Follow the lessor’s process for purchasing the vehicle.
Pros and cons of a lease-to-own car
Buying a leased car is not for everyone. Some people may prefer to continue leasing new vehicles, and others may want to check out the used car lots for their next purchase. When making this sort of decision, it's best to weigh the pros and cons to determine the right move.
Pros of buying a leased car
- If the buyout amount is lower than market value of the vehicle, you may pay less to buy out your lease than to purchase a similar vehicle.
- You won't have to spend time shopping around for a new car.
- If there is excess wear and tear, you may not be charged for it.
- You may not be charged for any mileage you went over.
- You get to keep a car you love.
Cons of buying a leased car
- If the buyout amount is higher than the market value, you may be overpaying for the car.
- Financing a lease buyout may come with higher interest rates.
- Excessive wear, tear, and mileage may reduce the value of the vehicle.
- You may end up paying more for the car than you would have if you bought it originally.
The bottom line
Buying a leased car can be worth it if you're able to purchase the vehicle below its market value. Or it could be worth it simply because you adore the vehicle and don't wish to go through the hassle of switching it out or breaking in a new one. Try negotiating terms and conditions before agreeing to anything. It's never a bad idea to ask for a better deal. Keep in mind that you'll need to contact the finance company — not the dealer — in order to ask for a lower buyout price. Though, you may find few companies willing to negotiate. Remember to account for the cost of wear and tear, which could prove a deal breaker for some if excessive. Also, remember to factor in mileage, which goes a long way in determining the car's actual value.