How to buy your leased car the smart way


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You had reservations about getting into a long-term relationship. A few years later, though, you realize you’ve fallen hard and you feel ready to take the next step.

Commitment has a way of sneaking up on you, even when it involves the decision to go ahead and buy that car you’ve been leasing.

Now that you’ve decided to go from leaseholder to owner, you might as well get a good deal in the process. Here’s what you need to know about everything from auto lease buyouts to negotiating tactics, all aimed at helping ensure that you and the car will be very happy together.

Think about the timing of the lease

In some cases, the question might not be how to buy your leased car so much as when to buy it.

If you decide to purchase before your lease expires, it amounts to an early car lease buyout and you could have to pay extra fees or finance charges. Check the terms of your lease agreement thoroughly to see how the leasing company handles early buyouts. If too many fees come into play, you might find it easier financially to wait until the end of the lease.

Also, make sure the leasing company doesn’t misinterpret your interest in an early auto lease buyout as a desire for early termination of the contract. Be clear that you want to get the car, not get rid of it, to prevent any confusion.

Get a handle on the car’s value

As you make a plan for how to buy your leased car, you’ll need to do some research on two types of car value:

  1. Retail value. How much you would pay to buy the car from a dealer
  2. Wholesale value. How much a dealer would pay to buy the car at auction

For detailed pricing information, check out sources such as Kelley Blue Book,, TrueCar and Edmunds. Have all the relevant information ready, including make and model and mileage.

Next, compare your findings with the car’s residual value (an estimate of how much it would be worth at the end of the lease) stated in your lease agreement. The typical lease will combine the residual value with a purchase-option fee, if applicable, to estimate how much the leasing company will want to charge.

By doing some independent research, you can develop your own estimate of the car’s residual value. If your numbers and the leasing company’s numbers are too far apart, you may want to give this decision some more thought.

BANKRATE TOOLS Use the Bankrate Auto Lease Calculator to estimate your car’s residual value.

Shop around for financing

The leasing company will likely want you to finance the purchase through them to squeeze out some extra profit with a markup. Don’t say yes until you’ve explored other financing options before the process gets to that stage.

In addition to lending money for new and pre-owned cars, some lenders also offer car lease-buyout loans that work like refinancing loans. As with any auto loan, the key to getting a good deal is shopping around. Check out lease-buyout loans from local banks and credit unions and online lenders. This way, the leasing company will have to beat the best deal you found on your own.

Let them make the first move

You may feel like you can’t wait to contact the leasing company to discuss an auto lease buyout, but take a moment to pump the brakes. Making the first move could blow your chances at negotiating favorable terms, according to consumer advocates.

Typically, the leasing company will call about 90 days before the lease is due to expire. If you contact them before that countdown starts, you may tip your hand about how much you’d like to buy the car.

In this way, an auto lease buyout is like many other types of transactions. When the seller doesn’t know your level of interest, you have a bit of an advantage.

Try some talking points

Keep in mind that some companies have a no-negotiations rule when it comes to the purchase price on a lease buyout. However, don’t be afraid to raise the subject. There’s no harm in just asking the seller to think about making a few concessions, including:

  • Waiver of the purchase-option fee
  • Purchase incentives
  • Financing discounts

Experts point to the purchase-option fee as a sticking point that many sellers are willing to take off the table.

After all, you’ll never know what kind of deal you could get if you don’t even ask.

Make sure you’re ready

Now that you know the basics of how to buy your leased car and save money, take some time to reaffirm your commitment. Be certain that you’re ready to:

  • Do your homework on prices and values
  • Shop around for a loan
  • Negotiate price and terms, if necessary

If you have any lingering doubts, you may not be ready for the long haul (or the long ride) after all.

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