SHOULD I BUY OUT MY CAR AT THE END OF MY LEASE?
What does that even mean?
Since when you lease you only pay for what you use out of your car, you have the option at the end of your lease to pay the remainder of the car’s value and then keep it.
What if I want to buy out my car before my lease ends?
Not all leases have an option in your contract to buy out your car early, and the ones that do usually have some kind of time constraint that permits buy-outs only after you’ve been driving it for a certain amount of months.
Why would I even consider buying a car that I’m already leasing?
Well, if you’re looking for a used car to buy, your best option would be to buy the car you’re leasing because you pretty much know the entire history of the car because you’re the only person who drove it. One of the biggest downsides to used-car buying is that the buyer is unsure of where the car has been, how easy/difficult it is to maintain, etc. Buying out a leased car at lease-end eliminates all the uncertainty.
Also, if you have excessive mileage or excessive damages on your car you might consider buying it out to avoid paying extra penalty fees.
Lease-end buyout: good idea?
The lease-end buyout price is usually listed in your contract as the residual value of the car, which is sometimes negotiable but usually not. There are a couple ways to determine whether the price is worth negotiating or not:
- The most fair price a leasing company will give you for the buy-out of a car will be the residual value of the car – if your dealer is offering this option, it’s a good deal
- You could also determine a fair price based on what other people are paying for the exact same car with the same amount of miles on it in the market.
- Also, if you were to return your car at lease-end the leasing company would be selling your car at wholesale price or trade-in value – therefore, anything you pay that is above wholesale price is more than they would get otherwise – use this to leverage your negotiation
Early buy-out: good idea?
Early buy-outs are generally calculated by adding the residual of your car to the amount you still owe on your lease. If your car depreciates quickly, then the remainder of your lease will probably be significantly higher than you think it is.
For this reason it is probably a better idea to just wait until the end of your lease to buy out your car if that’s the route you want to take. It’ll just be way cheaper that way
What’s the difference between an early buy-out and early return termination?
Pretty self explanatory – with an early-buy out, you end up keeping your car. With an early return termination, you cancel your lease early and return your car to the dealership.
If you want to buy out your car, make sure you know all your options and decide which one best fits your lifestyle.
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