How to Buy Out a Car Lease

Buying out a car lease means you purchase your leased car either after the lease expires or before (an early buyout). You can either pay off the lease with cash or get a car loan to finance the buyout. The main reason to buy out a car lease is because you know your car is in good shape and you want to keep it longer than the lease term. Another reason is to avoid steep penalties from excessive mileage or wear and tear on the car.

Instructions

Difficulty: Moderately Easy

Purchase a Car at Lease-End

1. Check the Kelley Blue Book to determine the market value of the car (see Resources below). If the market value is equal to or more than the residual value for your car, it makes sense to buy it after the lease expires.
2. Talk to your dealer or leasing company about the buyout options and negotiate a fair price for the car.
3. Secure financing for your car loan or pay cash. Don't be afraid to look for a car loan outside of a dealership. This can often save you money.

Buy out a Car Lease Early

4. Contact the lender to find out what the current buyout price is.
5. Shop for a car loan to finance the buyout amount if you don't have the cash on hand. Your dealer may be able to offer you a loan, but you should shop around to find the best deal.
6. Get your new lender to write a check to the old lease company for the amount you need to buy out the car.

Tips & Warnings

• If the market value of your car is less than the residual value and you still want to keep the car, you may be able to negotiate the price with the leasing company or dealer. In most cases, a leasing company will want to negotiate to get rid of the car. Leasing companies are not in the business of holding onto cars.
• Not all lease contracts allow buyouts before the lease expires and some contracts impose restrictions on when you can exercise a buyout option. Read your contract carefully to determine what is allowed.
• Contact the leasing company to make sure your buyout will not be considered an early termination. If so, that can cost you a large sum of money.
• Until you pay off the lender who finances your car loan, you will not own the title of the car and it will need to registered with the lender as the lien holder.