Buying Your Car at the End of a Lease: Should You Do It?

Are you considering buying a vehicle at the end of a lease? It can be a good option in some situations, such as if your buyout cost is less than your car’s current market value.

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However, there are also scenarios where it’s less likely to work out in your favor. To help you make an informed decision, here’s a quick guide to when lease buyouts can make sense, how they work, and where you can find financing to help you complete one. 

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When it makes sense to buy out a leased car

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If you’re not sure if you should buy your leased car or not, here are a few common scenarios where it can make sense:

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• Your buyout price is lower than your car’s market value: When your residual buyout price is significantly lower than the current market value of your leased car, buying it can be a good deal.  
• The car is in great condition: If your buyout price is competitive and you’ve taken good care of your leased car, buying it can help you avoid the risks of buying a different used vehicle with an unknown history. 
• You’ve exceeded the mileage limit: If you’ve exceeded the mileage allowed in your lease, you’ll often owe fees when the lease ends. Buying the vehicle lets you avoid them. 
• You have excess wear-and-tear fees: Leasing companies also charge for excessive wear-and-tear, such as interior damage, scratches and dents. If you’re facing a large bill, buying the car lets you avoid it. 
• You love the car: Shopping around for a car can be a hassle. If you love your leased vehicle, it fits your needs and the cost is reasonable, it can make sense to buy it and avoid the trouble. 

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If you’re happy with your leased car, it’s in good shape and your buyout price is competitive, a lease buyout can make sense. High fees due to excess mileage and wear can also play a role in the decision. 

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When to walk away from a lease buyout

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While a lease buyout can make sense in many cases, here’s when it may be best to walk away: 

• The car’s residual value is too high: If the lease-end buyout price is higher than the current market value of your vehicle, you can likely get a better deal by returning the car and buying a similar one elsewhere. 
• You want a new or different car: If you want a newer car with the latest features and a full warranty, or just prefer a different one, it makes sense to return the leased vehicle and shop around. 
• The car has mechanical issues: If your car has had frequent problems or has costly repairs on the horizon, returning it can help save you on upcoming maintenance costs. 

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Again, the decision comes down to how competitive the buyout cost is, the condition of the vehicle and your personal preferences. 

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How to buy your leased vehicle

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If buying your leased vehicle sounds like the right next step for you, here’s how to go about it.  

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1. Get your buyout price

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Buying a vehicle at the end of a lease is often straightforward — you pay the pre-set buyout price in your contract and take ownership. However, if you want to buy the lease out earlier, you may face extra costs — such as remaining payments or early termination fees. To figure out what to expect, contact your leasing company and request the final buyout price, including all applicable taxes and fees.

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2. Consider your car’s value and condition

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The next step in buying a leased vehicle is to compare the total buyout price to its fair market value. You can use a vehicle trade-in value tool, such as the one provided by Kelley Blue Book. 

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If the value of your car is higher than the buyout price, you’re likely getting a better deal buying the leased vehicle than you could get out in the market. If it’s lower, you’re likely not. Additionally, consider the vehicle’s current condition and if the buyout cost is worth it.

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3. Compare your financing options

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If you decide to move forward with buying a leased vehicle, assess how you want to pay for it. Using cash is an option, but if you prefer financing, an auto lease buyout loan can help. 

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To secure the best rates, you’ll want to check your credit to make sure everything is accurate and see if you can make any quick improvements. From there, shop around, collect quotes and compare them side by side. To find the best deal, consider key loan factors like the APRs, monthly payment amounts and total loan costs. 

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4. Complete your lease buyout

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The last step is to contact your leasing company to tell them that you’re buying out the lease. If you're using financing, your lender will typically pay the leasing company directly and handle the title transfer. If you’re paying cash, you’ll handle the payment and will need to put the title in your name. 

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Ready for a lease buyout? RefiJet can help

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Researching lenders online and applying one by one takes a lot of time. If you’re ready to get an auto lease buyout loan, RefiJet can help you speed up the process and find a competitive deal fast. 

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Simply fill out a single application, and we’ll submit it to multiple lenders in our national network using a soft credit check process that doesn’t hurt your credit scores. Upon pre-qualification, you’ll receive multiple loan options with varying APRs, terms and monthly payments. You can then review your options to find the best fit. 

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FAQs

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Still wondering about the details of buying a vehicle at the end of your lease? Here are quick answers to common questions. 

Is it smart to buy a car that you leased?

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It can be smart to buy a car that you leased but it’ll depend on your situation. For example, it can make sense when you love the car, it fits your needs and the buyout price is lower than the car’s market value. However, it’ll make less sense if the buyout price is higher than the car’s market value, the vehicle has had mechanical problems, or you’re ready for something different. 

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Is there any sort of improved pricing for buying a leased car?

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When you lease a car, your contract will list the buyout cost (residual value) you can pay at the end of the lease to keep the car. However, some companies may be willing to negotiate it or offer other incentives, such as discounts or special financing rates. It’s worth asking and trying to get the best deal possible. 

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Can you finance the leased car you are looking to purchase?

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Yes, you can finance the purchase of a leased car through a lease buyout loan. These loans work similarly to traditional auto loans. You borrow an amount upfront which is often secured by the vehicle and repay it through fixed payments over a set term. 

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How is the buyout price of my leased car determined?

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The main factor of your buyout price is the residual value in your lease contract — the fixed cost to buy your car at the end of your lease based on the car’s projected value. Additionally, your buyout price can be impacted by time left on your lease, purchase option fees and sales tax. 

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How does trading in a leased car work?

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Trading in a leased car is similar to trading in a car with a loan. The dealership buys the car and pays the buyout price to the leasing company. If the trade-in value you get is more than the buyout price, you can put that amount toward your next auto loan. However, if it’s less, you’ll need to cover the difference or roll it into your next loan.

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