Is Buying Out Your Car Lease a Good Idea?

Buying out a lease vehicle is a good idea if you are happy with the vehicle and the buyout amount stated on your contract is near the fair-market value. Remember that the vehicle may no longer be under factory warranty.

Residual Value

The residual value is the lease-end value listed on the original contract. This figure is not normally negotiable, but contact your leasing company to check if they offer any last-minute discounts.

Fair Market Value

Fair-market value is the cash value of a vehicle on the open market. You can calculate this amount by using online valuation tools. if your residual is higher than the fair market value, you may want to pass on buying out the lease unless the lender offers a good deal.

Financing

Financing a lease buyout can be arranged through a local dealership who sells your brand of vehicle. As a lease buyout is a used car transaction, expect higher interest rates than on a new car.

Warranties

Ask a dealership about extended warranties on a lease buyout, as the factory warranty coverage may have or will soon expire.

Expert Insight

If a vehicle has served you reliably and it makes financial sense to keep the vehicle, a lease buyout is a good idea. A buyout can also help you avoid excess mileage charges if you are over your maximum allowed mileage.

References

• Car Lease Buyout