Do You Need To Buy Out Your Car Lease?

Once the lease is done, you can already leave the car with the dealer, ink some documents. After this, you can either walk away or search for a new car. 

But what if you really like that vehicle? Should you buy it instead? 

Here are some of the essential tips that you can consider whenever you are in the dilemma of buying out a lease car. 

Is It Worth Buying?

Check your lease contract and see the residual amount. Others call it the buyout amount. If you are making online payments, then you can just look for the residual amount by accessing your count. You can also find these numbers by contacting the bank that has your lease. 

Once you got the residual amount, input it on various car appraisal tools that are available on different websites, such as on Edmunds. They will be able to tell you the average trade-in, private party value, and the average retail price of your vehicle. If the buyout amount is significantly lower than the average retail price, then buying it should never be a regrettable move. 

Is The Car In Good Condition?

One of the best aspects of leasing is that it gives you a warranty throughout its duration. Hence, all accidents and mishaps will be covered by the warranty that comes with the lease. However, when you buy out a car lease, you will lose this particular safety net. Keep in mind that most of those bumper-to-bumper insurances will end after three years. 

Therefore, it is ideal that you can have your vehicle checked by professional automotive mechanics before you purchase it. If it is still under the factory warranty, take advantage of this. It would enable you to make repairs and replacements cheaper or at no cost at all.

If you were not able to replace the battery, brakes, or tires during the term of the lease, you would need to do so at any point after you acquired it. You will also have to factor and account for the expenses, as well as the amount that you are going to spend on regular maintenance. If it is too much, then buying the lease might not be a good decision. 

However, if your vehicle is still in good condition, and you deem that it won’t break anytime soon, then buying it out would be a great idea.

The Mileage 

Many people find it appealing to buy their leased cars when it has exceeded the mileage limit. The same thing is applicable when it comes to excessive wear-and-tear. Of course, the reason for this unusual enticement is quite simple.

You see, when you opt for lease buyout, you will no longer be required to pay for any penalties that are stipulated whenever you exceed the allotted mileage. Similarly, it frees you from the responsibility of paying for any damage to the vehicle’s interior and exterior. 

Of course, there’s still a need for you to factor the penalties. Try to see if buying if paying the penalties is worth it or not. If it is the latter, then it is a wise move just to buy out the lease. 

Your Budget

Again, it boils down to this particular factor. One way or another, you will need to consider your overall financial capabilities in deciding for a buyout. Keep in mind that buying out without making a new down payment will result in your monthly payment will likely to skyrocket.  

Let us take the following situation as an example. If a person started a lease years ago, he or she made a downpayment of $1,999 for a vehicle. He or she needs to pay at least $200 per month, excluding the taxes for 36 months. This particular lease is expected to have a residual amount of $13,500. 

The buyer decided to buy out the vehicle when the lease is already at the end of its term. It was decided that the person will take a 60-month loan as a means of paying the residual amount of $13,500. Because of this, the new monthly payment increased to around $260, given that the interest rate is at 6%. If this buyer opted to extend the payment duration to 72 months, the monthly fee goes down to $224. 

Of course, this calculation does not include other fees and taxes.

It is essential if you can factor these things out. You need to be clear about these numbers. Are you capable of paying such amounts after you buy out the vehicle?