Holders of car leases have two choices at the end of the lease term: turn in the car to the lease company or buy the car for the price listed in the lease contract, sometimes referred to as a balloon payment. If you want to keep the car, compare the purchase price listed in the contract with the current market value for similar cars. There may be some room for negotiation.
Car Lease Residual
With a car lease, your monthly payments pay for a portion of the car's value; the balance at the end of the lease is a residual value. To purchase the car from the leasing company, you pay the residual value plus any other listed fees. Leasing companies base the residual value on their forecast of the car's wholesale value of a car at the end of the lease term. If the residual value is accurate, the price should be a good value for the car.
Actual Value
Determine if the Kelley Blue Book value is higher, lower or about the same as your car's residual value. Find the current trade-in value of the car, using an online value website, or have a dealer give a buy bid on the car. If the current wholesale value is significantly lower than the residual value, the leasing company will take a loss on the car if you turn it in and the car is sold at auction; you could turn this into a negotiation opportunity.
Negotiation
The leasing company may or may not be willing to negotiate a purchase price different from the contract's residual value. To ask for a lower price, select a value above what the leasing company would probably get at auction but lower than the residual. Be ready to buy the car immediately at the price you negotiate. You should be able to write a check or have pre-approved financing. Contact the leasing company, inquire if there is someone with whom you can discuss buying out your lease and make an offer. The leasing company may be willing to take a lower price.
Using a Dealer
A car dealer may be able to negotiate a better price with the leasing company and allow you to buy the car for a lower price than the residual value. This tactic has the best chance if you use a dealer in the same type of car and if the leasing company is the finance arm of the car manufacturer. In this scenario, the dealer buys the car from the leasing company and then sells it to you. The leasing company may be more willing to negotiate with a dealer. Another benefit is the dealer will take care of the sales tax and registration requirements.
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