How to Buy a Leased Car

When you lease a car, the end of the lease term requires the return of the leased vehicle. At this point, there's an inspection of the vehicle to assess its condition and mileage. Any damage to the vehicle determined to be above and beyond normal wear and tear will result in a fee. You will have to pay this when you turn over the vehicle, unless you decide to buy it. If you like the car and wish to keep it, these fees will be waived.

Difficulty: Moderate

Instructions

Things You'll Need:

• Your original lease agreement
• Access to the Kelley Blue Book website

1. Check your original lease agreement to determine the residual value of the car. This is the price you will have to pay to buy the car after all required lease payments have been made. If you want to buy the car early, then this figure will be adjusted to reflect missing payments and any early lease-termination fees that may be in the contract.

2. Research the Kelley Blue Book value of your car (see Resources), so you know in advance if the buyout price is an attractive one. Be honest in your assessment of the condition of your vehicle so you can get an accurate appraisal figure. If the buyout price of your vehicle is $10k, but the Blue Book resale value is around $8k, it may be wise to rethink the purchase plan and simply turn in the vehicle after your final lease payment.

3. Call or email the bank that owns your lease and ask them if they're willing to negotiate the buyout price. The amount printed on your lease agreement isn't always etched in stone; sometimes the bank would rather not take possession of the car and would be happy to sell it to you. Depending on market conditions they may not be open to negotiation, but it never hurts to ask.

4. Call several banks and ask about their car loan rates, so you can assess your financing options. A good place to start is the bank you usually do business with. Setting up a loan with them should be fairly straightforward, since they already have access to pertinent financial records.

5. Set up an appointment with the loan officer of the bank you decide to finance with, so that you can sign the necessary loan documents. When everything is signed, the bank will then send in a check to the original financing company in the amount of the negotiated payoff amount, effectively becoming the new owner of the vehicle. You will now be making payments to your bank for whatever loan term you agree upon.

Tips & Warnings

• Check your lease agreement carefully to see if there are any end-of-lease fees that you're expected to pay. On top of this, if your car's mileage significantly exceeds the allowance outlined in the lease contract, you will be charged a pre-determined rate-per-mile. This can be a substantial amount, and this extra fee, especially when coupled with any termination fees, may be a determining factor when deciding whether to turn in the car or buy it.
• Do not attempt to buy the vehicle if you're not close to the end of your lease term. You are still liable for all payments due, and other early lease termination fees will apply that will make it a very costly procedure for you.

References

• Article: leasing vs. buying

Resources

• Kelley Blue Book site