The process of buying out a car lease is very similar to financing a first-time car purchase even though you already have the car. Unless you're paying cash, you must apply for financing and budget for fees such as taxes, registration and titling costs. Expect to arrange for financing if necessary and budget for additional fees.
Obtain the Lease Buyout Amount
You'll need your total lease buyout amount to purchase your leased vehicle. Call your leasing bank to obtain it or review your contract. Leasing contracts list the lease purchase price as the last payment due. Philip Reed, the Edmunds.com senior consumer advice editor, suggests negotiating the purchase price of your vehicle. Reed suggests offering your leasing bank less than its average retail value. You can obtain the vehicle's retail value at Edmunds.com, the NADA Guides or Kelley Blue Book website. You may save thousands of dollars if the bank accepts your offer.
Secure Payment
Once you have your purchase price, secure financing or payment. If you plan to finance the vehicle, you can apply to any auto loan provider you'd like. Leasing banks rarely offer competitive interest rates for used car loans, so be sure to compare the leasing bank's interest rates to those of other auto loan providers. Check the interest rates of credit unions, local banks or online lenders. Submit a credit application for the car's purchase price to determine your loan term, rate, approval amount and monthly payment.
Budget for Other Fees
Before moving forward to purchase your leased vehicle, determine how you'll pay for additional fees required for purchasing a leased car. Many states do not charge sales tax on a vehicle's total price when leasing. Expect to pay taxes on the vehicle's purchase price, which can add thousands to your vehicle's buyout amount depending on where you live. Contact your state motor vehicle department to determine the total cost of additional fees. You may want to provide a down payment toward your loan amount or arrange to finance the extra costs.
Complete Payoff and Paperwork
Once your loan is approved, expect to sign loan contracts with your new lien holder and to obtain a check to provide to your leasing bank. Many leasing banks lack local presence, so plan to mail the check or work with your lender to electronically transfer funds to the leasing bank. Any down payment amount should be provided to the leasing bank to decrease your total loan amount. If you pay cash for your purchase, expect to receive the vehicle's title by mail or an official lien release to clear your current title, depending on where you live. Complete your state's process for transferring vehicle ownership or sign necessary forms with your lender.
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