Should I buy out my car lease?
Dear Driving for Dollars,
My car lease is ending soon and I'm trying to decide if I should buy it out. I really like the car, and it has been trouble-free. How do I decide if I should buy the car when the lease term is over?
You are not the only one contemplating that question. Thanks to many great lease deals over the past few years, car leases are again on the rise and many of those leases are starting to come to the end of the lease term.
You've already answered the biggest factor in deciding whether to buy the car you've been leasing. You like the car and would be happy driving it longer. The next step is to look at the costs associated with this transaction.
Start by looking at your lease contract to see what the residual value is. This is the cost for you to buy the car. In addition, there may be a purchase fee of as much as a few hundred dollars that might be required as well, so be sure to factor that in if it's in your contract. Next, do some research at car-pricing sites online such as Edmunds.com or Kelley Blue Book to determine what your car is worth compared with your cost to buy it.
Remember that you will be paying extra if you turn the leased car in and it has damage or you are over the mileage limits. You won't pay these costs if you buy the car at the end of the lease, so you could consider that a savings as you make your decision.
If you find that the cost to buy the car is higher than the market value and you still want to buy the car, you may be able to negotiate the price downward. Call the lessor on your contract to see if there is room to negotiate and be prepared to provide copies of your online research.
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