You might not save any money when buying out your car lease. Leasing payments are based on expected depreciation over the term of your contract. The expected value at the end of the contract, known as the residual value, stays out of your payments. For this reason, payments are lower than a comparable finance, but lower payments result in less equity.
Researching Costs
Compare your lease purchase price to the vehicle's resale value to determine whether you'll save money by purchasing your lease. Ask your leasing bank for your lease buyout amount. Obtain your car's resale value using appraisal websites like the Kelley Blue Book website, NADA Guides or Edmunds.com. Also check your local classifieds, such as your newspaper, Craigslist and the eBay Motors local classifieds. Your vehicle might be worth more or less depending on where you live and current market conditions.
Comparing Values
Your researched values should include only properly equipped vehicles with the same mileage as your leased vehicle. If the resale value of your leased vehicle is more than your lease buyout amount, you'll save money. If you can purchase your same vehicle for less than your lease buyout amount, you'll lose money. When you initiated your lease, the leasing bank guessed its value at the end of the lease. You might find the bank incorrectly estimated the vehicle's value or unforeseen market conditions reduced the value of the car by thousands of dollars.
Considerations
You must pay taxes and fees when purchasing your leased vehicle, so be sure to add your state's taxes and motor vehicle fees to the of the lease buyout price. Depending on where you live, the tax payment can add thousands to your purchase price. Check with your state motor vehicle department to determine your tax rate. Most states tax only the portion of the vehicle you actually pay for, so you don't pay tax on the vehicle's entire cost when leasing.
Benefits of Purchasing a Lease
Even if you don't save significant money by purchasing your lease, the buyout still offers some benefits. Since you maintained the vehicle, you don't have to worry about it's maintenance and repair history, as you've driven the vehicle since it was brand new. You can also avoid paying penalty fees due at the end of the lease, such as over-mileage or wear-and-tear fees. If you turn in your lease with damage or with more mileage than your lease contract allowed, the bank will charge you for loss of value. Consider the cost of penalty fees (if applicable) to determine if purchasing your lease or returning it saves you more money.
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