Should I Buy Out My Car Lease?

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Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


, Contributing Writer - March 5, 2020

When your car lease is coming to an end, you may be wondering if you should buy the leased vehicle. Are you considering if it’s worth it to buy out a lease, or if you can negotiate the price? Here are some things to examine while you decide what to do.

What Will I Pay for My Leased Car?

If you decide to buy out your leased vehicle, the price you pay is going to be its residual value – which is the estimated value of a car at the end of the lease term. It’s calculated before you sign the lease contract, so revisit it to check that value.

The first real step in determining whether or not you should buy out your lease is comparing the residual value to the actual cash value (ACV) of the vehicle. If the residual value is much less than the ACV, it may be a good deal to buy the car.

If the ACV is much less than the residual value, maybe it’s not such a good idea to finance or pay cash for the vehicle. If you buy the car for more than it’s actually worth, you’ll begin your new auto loan with negative equity.

Can I Negotiate a Buyout Price?

Whether or not you can negotiate a buyout price depends on the lessor and the residual and actual cash value of the vehicle.

Say your leased truck is worth way less than the residual value. You may be able to work something out with lessor. As the lessee, you have first rights to buy the truck. If you don’t buy it, and the dealership doesn’t want it, the lessor usually sends it to auction. Lessors have to pay to do this, and they may not get the full amount they were looking for. This is another reason why you should know the ACV of your leased car – for leverage.

There isn’t a guarantee that the lessor will negotiate with you on the buyout price. And if the residual value and the ACV are the same or similar, they may not budge on the price at all.

Things to Consider When Buying Out an Auto Lease

Other than the price of the vehicle, here are some additional things to consider.

If you went over your allotted mileage limit, buying the leased car could save you from paying the mileage fee. Once you’re over your limit, you’re typically charged 25 cents for each additional mile. If you’re considerably over your limit, calculate the additional charges. Again, factor in the residual value and ACV. If the residual value and the ACV are similar, and you’re way over your mileage limit, buying out the vehicle could save you from paying the additional fees.

If the car has had a rough life or multiple repairs throughout your lease term, returning it and signing another lease or financing a new vehicle could save you in terms of future repairs. During your lease, the car was likely under the manufacturer’s warranty – but that won’t last forever.

Another thing to consider is how much you actually like the vehicle. If you’re not satisfied, and you won’t be paying extra fees for going over miles or excessive wear and tear, returning it to the lessor and signing another lease or financing another car may work better for you.

Lease a Vehicle Again or Buy Another Car?

Once you decide not to buy out the leased vehicle, you might want to consider financing. If you find yourself always going over your mileage limits on leased cars, or you simply want to have more freedom with customization options, an auto loan could be your next step.

Here at CarsDirect, we work with borrowers across the credit score spectrum – including those with bad credit and no credit. We take the hassle out of finding a dealership in your local area that can work with unique credit situations. To see if we can help with your next auto loan, simply complete our free auto loan request form to get started!

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, Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


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