You can purchase your car at the end of its lease. The car's purchase price is stated in your lease contract as the last payment. To purchase the car, you can obtain financing at a lender of your choice; you don't have to use the same bank for financing as you did for your lease.
Vehicle Value
Before purchasing your lease, determine if its purchase price is fair. Just as you wouldn't purchase a used car for more than suggested retail value, you should not purchase a leased vehicle for a price higher than retail value. Research your car's value at Edmunds.com or the Kelley Blue Book website. Your lease purchase price was determined the day you signed your contract, so the value may be higher or lower than the current market suggests. If you find your lease buyout price is higher than resale value, offer a lower price to your leasing bank. Otherwise, you may find yourself in an upside down car loan, or owe more than your car is worth.
Shopping for Financing
Leasing banks offer competitive financing for new cars; the banks usually work with the manufacturer to offer lower-than-average rates or cash incentives. However, rates offered for used cars are rarely as competitive. Ask the leasing bank about the rates it offers for used-car purchases. Check the rates of banks in your area, such as a credit union or a bank where you hold an account. Once you find a good rate, you can often apply for a loan online at the bank's website, call or go to a bank branch to submit your application.
Warranty and Insurance Considerations
If you're out of factory warranty or will be soon, consider adding an extended warranty to your lease purchase. Most leases run during the term of the car's factory warranty. Without additional warranty coverage, repairs become your responsibility. Most banks allow borrowers to add the cost of warranty coverage into the loan amount. If your vehicle's loan balance is more than your vehicle's value, ask your bank or insurance agent about adding gap insurance, which covers the gap between your loan balance and vehicle market value if you suffer from a loss.
Other Lease-End Options
You do not have to purchase your lease to avoid paying over-mileage or lease-end fees. If you plan to pursue a new purchase, you can trade your leased vehicle to a dealer or sell it privately for the amount stated in your contract. If your vehicle's value exceeds the lease buyout price, you can keep the profit or put it toward a new loan. If you owe more than the car's value, you can provide a down payment or roll the extra fees into a new loan.
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