As sticker prices climb, many lease customers are choosing to purchase their car. Here’s what you need to know about buying out your leased car.
What is a lease buyout?
Buying out a lease involves paying the car’s “buyout price” according to the lease contract, which then makes you the car’s new owner. Buying out a lease makes the most sense when you are nearing the end of your term and have to decide if you want to turn it in and lease a new one, or, purchase it.
How can I determine my car’s buyout price?
Look for the term “residual value” in your lease contract. The residual value is estimated by the leasing company at the start of the lease. When you’re nearing the end of your term and decide you want to do a lease-end buyout, you will pay the residual value along with any fees to own the vehicle at the end of the lease.
If you like your ride and your term end is farther down the road, you can see if your contract will allow you to do an early lease buyout. To determine your early lease buyout price, add the residual value to any remaining payments. For example, if your car’s residual value is $25,000 and you owe another 10 payments of $500, the car’s buyout price is $30,000.
Will I need to pay any fees in addition to the buyout price?
Your vehicle’s buyout price may be subject to an auto sales tax, registration costs, title transfer, and insurance adjustments. Your lender may charge additional fees on top of that. Take note of your lease contract details so you’ll know the true total you’ll be paying before deciding to purchase a leased car. The good news is that you won’t be accountable for typical lease-end fees, which can include the costs of reconditioning the vehicle and an over-mileage penalty.
If you’re unsure if buying out your lease is the right financial decision for you, we can help. Make an appointment at any one of our 24 branches to discuss your options.
What are the advantages of buying out a lease?
With the current state of the used auto market, you can save money by buying the car you already like. If your residual value is lower than the market value, buying out your lease can be a more affordable choice, especially if you’ve maintained it well and the vehicle has fewer miles driven than your contract stipulated.
You can find out the market value of your car by visiting websites like Edmunds.com or Kelley Blue Book.
How do I buy out my lease?
If you decide to buy out your lease, run the numbers as outlined above to be sure it’s a financially responsible decision. When you have the total buyout price, your next step is to work on financing. Each financer has a different way they allow people to buy out leases, so consider a financial institution’s process as part of your research. MSGCU offers auto loans as low as 5.49% APR* with no application fees, quick approvals, and repayment terms up to 84 months. When you’ve decided on a lender, contact the company you lease from to complete the purchase.
Finally, notify your insurance company about the change in ownership of your vehicle. If you’re want help navigating insurance options, check out Members Home and Auto or TruStage Auto and Home Insurance Program. We’ve partnered with them to help bring you savings. It’s just one more way we give back to our members.
If you’re looking to finance an auto loan for a lease buyout, or need some guidance along the way, we can help. Call, video bank, make an appointment, or stop by any of our 24 branches.
*APR=Annual Percentage Rate. Offer requires Automatic Loan Payment transfer. Loan terms up to 84 months, depending on model year. APR may be higher, based on term of loan, credit score, collateral, and loan to value. New money only. Rates are subject to change at any time. Same-day approval on most vehicle applications. Review complete rates and terms.
Category: Finance
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