auto

The lowdown on buying your leased car

So from the moment you sign a lease, there's a good chance the residual value written in the lease is a little on the high side.

The second reason has to do with used-car prices. They've been down for the past three years, thanks to all the widespread discounts available on new cars.

So there's a good chance a 3-year-old car coming off a lease has taken a nice dip in value.

Combine an inflated residual value with a low resale value and most leasing customers are looking at a bit of a gap between what the leasing company wants them to pay and the actual values of the cars.

Still, there's a chance you can knock down the price of buying out your lease with some smooth negotiating tactics.

Play hard-to-get
Don't call and ask your leasing company about purchasing your leased vehicle.

"In order to maximize your negotiating power, let the lender call you," Shebesta says.

While you're waiting for your leasing company to call you, be sure to shop around for financing for a lease-buyout loan.

"It's just like a refi," says Mark Eskeldson, an auto expert and author of CarInfo.com, a consumer information and advocacy Web site. "You're paying off another lender with your loan."

As with any auto loan, the key to getting a good deal is shopping around.

Check out lease-buyout deals from local banks and credit unions and online lenders such as Capital One Auto Finance. That way, if your leasing company wants to finance your buyout loan, it will have to beat the best deal you found on your own.

Once you've been pre-approved for a lease-buyout loan, you can sit tight and wait for your leasing company to contact you.

When that phone call comes, be as casual as possible when you're asked whether you'll be turning in your car at the end of your lease or buying it.

Tell them you're planning on turning your car in. Wait a beat and add that as much as you like the car, you don't like the residual value.

Next, ask about purchase incentives. Would they be willing to knock down the purchase price of your leased vehicle? Could they make that pesky purchase-option fee go away? What about a discount financing deal on your lease-buyout loan?

You never know what kind of deal you'll land by asking. It's definitely worth a shot.

Keep in mind that some major financing companies, including GMAC, have a no-negotiations-rule when it comes to lease buyouts. The purchase price on the lease contract is what you pay, end of story.

You may have better shot at negotiating a lower lease buyout deal with a smaller financing company.

"The smaller the financial institution, the better the chance you have," Kranitz says.

At the very least, you should be able to get that purchase-option fee reduced.

"It's always worth a try," Kranitz says. "They're more apt to waive the purchase-option fee than anything else."

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-- Updated: May 12, 2004

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