We're assuming that if you're reading this article, you have a leased car. And, if you do, you might be considering a buyout.
A lease buyout allows a lessee (you) to, essentially, purchase their leased car and keep it. That’s often an excellent choice for lessees. Buyouts are particularly great for:
- people not looking forward to getting into another lease.
- people who like their leased car and want to keep a good thing going.
- people who want to stop leasing but can’t afford to buy a new (or used) car.
The cost of buying out a leased vehicle can be referred to as the buyout price or buyout amount. In today's markets, the buyout price is often close to or even cheaper than buying a comparable car another way.
So, it’s a good potential solution. But what if your buyout price is just a little out of reach? Is it possible to haggle the way you can when buying a new or used car? To answer that question, let's step back a bit first.
1. What's the buyout price of a leased vehicle?
When you sign a lease contract, the leased car’s residual value is locked in. This value is an estimate for the vehicle’s worth at the end of your lease, since it'll lose a predictable amount of value (or depreciate) over the course of your lease period. Manufacturers and lenders determine this value using predictions based on years and years of past data.
Did you know you can buy out & keep your leased vehicle?
The buyout price or amount is the cost of buying your car at lease-end and keeping it for yourself, title and everything. This typically consists of:
the residual value + manufacturer and/or dealership fees + sales tax + any remaining payment obligations (if you buy out early).
2. Why can't buyout price (typically) be negotiated?
While your leased car’s residual value is contractually set in stone, your buyout price is not. Because the buyout price takes variables like remaining payment obligations into account, your lienholder can't just send you one number and call it a day. You’ll need to get in touch with your leasing company to find out exactly what your buyout price is. (Which makes it hard for you to negotiate.)
In terms of wiggle room with the numbers that go into a buyout price, there’s usually not much. The residual value is set in your lease contract, and sales tax is out of the manufacturer’s control. Fees and remaining payment obligations would be your best bet for a negotiation, but manufacturers are by and large unlikely to budge on those. They’re incentivized to keep you in lease after lease, so they usually won’t encourage you to cut and run with the car.
If you’re really in the mood to haggle, you can always ask to negotiate, but it don't be surprised if you're turned down.
3. What if you want to buy out but can't afford it all right now?
Even if it's the right choice for you, a buyout might seem inaccessible or overwhelming, especially if you like leasing because of the lower monthly payments or were hoping to finance a car purchase. Are there options if you’d really like to keep your leased car but can’t front the cash for a buyout?
Yes. You can finance your lease buyout with a lease buyout loan, which is exactly what it sounds like: a loan to cover the costs of a lease buyout.
With a lease buyout loan, you’ll keep making monthly payments (which, depending on your loan terms, can be comparable or even lower than your monthly lease payments) to pay off the loan, but the car will be yours to keep. You could even sell the car and try to turn a profit on the buyout, if you wanted.
So, let’s review what we’ve learned.
The buyout price of a car is what it would cost to purchase that leased vehicle and keep it. Because of the variables that determine a buyout price, and because dealerships are incentivized to avoid negotiation here, you typically can’t fight for a bargain on the buyout price.
If you do still want to buy out your leased car and can’t afford the buyout price up front, you can get approved for a lease buyout loan and continue to make monthly payments on the car – as the owner.
Recently, we commissioned a third-party survey to learn more about how drivers approach leasing and buyouts. We found that 87% of respondents would recommend their most recent lease buying experience to others. But we also learned that less than half of consumers shopped around for financing when buying out their lease.
Here's our pitch: we can assist you with all that. Lease End will help you navigate a lease buyout, including determining your buyout price, securing a competitive loan with our partners (like Capital One and PNC Bank), and getting all your paperwork in order to complete the purchase.
Is it convenient for us to encourage you to buy out your leased car? Yeah, we have some skin in the game. But the reason we’re in this game is because buyouts can be such a great option for consumers. (In fact, a few manufacturers have even started restricting buyouts because conditions favored drivers the last few years.)
Bottom line is, we get it. Completing a buyout can feel overwhelming on top of everything else you've got going on. That’s why we pride ourselves on an experience that’s largely hands-off for our customers – even the process of finding and getting approval for a loan. Plus, you can get started in just 15 minutes online or over the phone. Visit leaseend.com or call (877) 425-0460 to get started today.
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