Buzz
As your car lease nears its end, it's time to decide: will you lease again, buy the car you've been driving, or opt for something entirely different? Here’s when it’s a good idea (and when it’s not) to buy your leased vehicle.
Although leasing may not always be the best financial option—since it can end up costing you more than purchasing a car you’ll own—there are situations where buying your leased car at the end of the lease term could be a smart move. Here’s when buying your leased vehicle makes sense, and when it doesn’t.
When It Makes Sense to Buy Your Leased Car
Deciding whether to purchase your leased car at the end of the lease—or even before it expires—requires evaluating your financial situation alongside the car's condition and your desire to continue driving it. Several factors can push you toward buying it:
The buyout price is lower than the car's market value. This could occur if the car has low mileage, is in excellent condition, or its value has risen since your lease began. If you've taken great care of it, through regular maintenance, repairs, and cleaning, this might apply.
Your mileage is below the lease agreement's limit. While you won’t get reimbursed for unused miles, the lower mileage could make your car more valuable than the buyout price.
The car has damage or excessive wear. If your car is in poor condition, its value could decrease, and you may face hefty penalties when returning it. In this case, it might be cheaper to buy the car and fix it up yourself.
Your lease contract includes additional fees. Some leases impose fees for exceeding the mileage limit. Make sure to consider these when deciding whether to buy out the lease or return the vehicle.
You plan to flip and resell the car. Depending on the car's model, make, and condition, you could profit by buying it, improving it, and reselling it. While the used car market has calmed, some sought-after vehicles could still be worth flipping.
However, all of this becomes irrelevant if you don't enjoy driving the leased car, or if it no longer meets your needs. If you're attached to the vehicle, compare the buyout price with purchasing something similar elsewhere. This will help you decide whether buying out the lease or looking at the market makes more sense.
When not to buy your leased car
On the flip side, if your car's market value is lower than the buyout price—due to high mileage, wear and tear, or low demand for that particular model—or if you face excessive fees or expect ongoing repairs, it likely doesn't make financial sense to buy the car at lease end. Also, if your personal needs or preferences have changed, the car may no longer be the right fit for you going forward.
One more thing to think about is whether you can pay upfront in cash, avoiding the need for financing, or if your credit rating qualifies you for an attractive interest rate and affordable monthly payments if you decide to take out a loan.
How to purchase your vehicle once your lease ends
To start, review your lease agreement to see if a buyout is possible and to understand any related costs or fees. It's also essential to research your car's current market value using a tool like Kelley Blue Book and explore financing options, particularly if you require a loan to cover the buyout and remaining payments. Don’t forget to factor in additional costs like sales tax, registration, and insurance.
The timing of the buyout can influence the overall cost. Purchasing the car mid-lease may be more expensive because you'll be responsible for the remaining lease payments. However, you might have better negotiating power when the leasing company reaches out 90 days before your lease expires to discuss your options. As with any car purchase, negotiation is often possible.
