Can I Finance the Buyout on My Lease?

Drivers who take good care of their leased cars and keep the mileage to a minimum may want to purchase the car after the lease period ends. Most leases have clauses that allow the driver to buy the car for a price that is negotiated at the time of lease signing. This is called a "lease buyout." If you don't have the cash to buy the car, you must finance the car with a used-car loan.

Financing Options at Lease End

Financing a lease buyout is no different than financing any other used vehicle; however, some lending institutions have higher rates for a lease buyout than for a used car. When your lease is nearing the end of its term, the leasing company sends out a letter informing you of your options. Your options are to return the car to the dealership or leasing company, or to purchase the car. You may want to finance the purchase through the bank that handled your lease -- since you are already doing business with the company, they may offer you a good rate or a streamlined approval process. If not, you have other options.

Shop Around and Compare Rates

When you decide to purchase the car, research your finance options online or through your local bank, credit union or savings and loan. Some websites let you compare interest rates and loan information to help you make a more informed decision. Once you know the going interest rate for a used car, leverage that information to negotiate a better interest with lenders. Most purchase loans for used cars are fixed at 36-, 48- or 60-month terms.

Fees and Conditions

Many lenders have set conditions for their used car purchase rates. Some require a certain credit score and have application fees, while others have fixed document preparation fees, according to Bankrate.com.

Considerations

Ask your current leasing company whether the final lease buyout price is negotiable. They may have too much inventory and a glut of leases for sale. According to Philip Reed, Senior Consumer Advice Editor at Edmunds.com, most people don't realize the buyout price may be negotiable, depending upon market conditions. If you leased your car from a large automobile manufacturer, they may have a sales person dedicated to lease returns. Speak to them and ask whether the lease buyout is negotiable.