What Is An Auto Lease Buyout? Things You Need To Know
Wondering if you can buy a car before the lease is up? Even more curious about what is an auto lease buyout, but your not completely sure how it benefits you.
25% of car drivers in the United States give their car a name.
For many of us, they aren’t just a mode of transportation.
However, more and more choose to lease, rather than purchase a car. If you don’t own your car outright, when your lease term is up, it’s time to hand the car back. At that stage you have to decide whether to turn the car in or buyout the lease.
So now that you have an idea about what is an auto lease buyout, what do you do if you want to keep your car at the end of your lease period?
If you’re unsure though, don’t worry. We’ll talk you through the details of what is an auto lease buyout. In addition we will discuss some of the main benefits of buying out your auto lease.
It Can Offer Great Value
Depending on the market value of your car, it can be a good financial move to buyout your lease. This is because you buy your car based on its residual value, which is the value based at the end of the lease with costs of your usage taken away.
If at the end of your lease, the value of your car is still high, then it’s possible to get your car at a bargain price compared to what you may have had to pay upfront from a dealer second-hand.
Make sure to do your research by comparing the residual value quoted to the current market value for your car. If the value is higher or the same, you know you’ve got a good deal.
It might even make sense to buyout your auto lease even if you don’t want to keep it.
If you can buy your car outright for less than market price (thanks to its residual value), you can then sell it on for a profit. The profit you make can then go towards a newer, better car that suits you and your family better.
To learn more about whether a lease buyout is best for you, use a car lease buyout calculator. After crunching the numbers you’ll have a better idea if it’s the right move for you.
You Can Escape End of Lease Fees
If you find that your car’s market value is below residual value, don’t be too alarmed. Especially if you’re looking at some of the fees you’ll have to pay at the end of your lease.
With these hidden lease fees, you might end up having to hand back your car and pay for any mileage or damages. You might even have to pay the firm for the privilege of selling your car with a disposition fee.
The good news is that if you buyout your auto lease, you won’t have to pay any of these. You’ll pay for the remaining value of the car. However, you won’t have to worry about your mileage or damage being questioned.
If you know that you’ve used your car a lot (so the mileage is high) or you’ve got some damage to repair, the cost of buying it outright and repairing it might be cheaper than the fees at the end.
You Know and Trust Your Car’s Condition
The great thing about buying out the auto lease on your existing car is that you’re already familiar with it.
You don’t need to rely on what the dealer says. You’re not motivated to lie to yourself, so you’ll know if your car is worth keeping or not.
You know every knock, every noise, every movement your car makes like the back of your hand. This makes it a much easier decision to decide whether your car is worth buying outright.
If your car is still running properly and the mileage isn’t too bad, why bother risking a replacement? If your car is still in good condition and works perfectly for you, buying out your lease might make more sense than handing it back.
No Need to Negotiate on the Price
If you’re not confident on the idea of negotiating for a good price for your existing car, don’t worry. You don’t have to.
The price you pay for your car usually includes the residual value cost we mentioned earlier. You may be able to haggle on price if you really wanted to with a lease end buyout negotiation. However, this will depend on the lease agreement you signed and on the individual leasing company.
After all, if you’re getting a good price on your car in the first place, it might not be worth the hassle to enter into a car lease buyout negotiation.
Remember to do your research on the market and residual values of your car before you look to buy. In addition, consider the effect of your end of lease fees. You don’t want to walk away from a good price and then be forced to pay out.
Improved Your Credit Score? Purchase on Credit and Get Better Rates
Completing a two or three-year leasing agreement is a great sign for lenders on your credit history when your considering a buyout car loan.
If you’ve paid on time every month and had no issues, it’s quite likely that you’ve improved your credit score over the course of the agreement. Handy if you’re looking to buyout at the end of your auto lease, but don’t have the funds.
Why? Because you’re a better borrower in the eyes of potential lenders, meaning the risk is lower.
When the risk is lower, the interest rates you can get on a car lease buyout loan will be lower, making it a more affordable and better value option.
Want to learn more about your credit score? Read through our essential knowledge guide on decent credit scoring.
Think About an Auto Lease Buyout
Now that you’re more familiar with what is an auto lease buyout you’re more equipped to make the decision that’s right for you. Buying out your auto lease at the end of its term is a great way to own the car you’re already driving at a reasonable cost without the hassle of negotiating a deal.
It’s also a way to exploit your potentially better credit score by purchasing the car on other forms of credit and escaping fees for overuse or excessive mileage. After all, why incur a penalty for simply using your car?
Knowing what is an auto lease buyout means you can keep the car you already have and love, and avoid the hassle and cost of shopping for a replacement.
If these benefits have convinced you to buyout your auto lease and you’re looking to buy it out using car lease buyout loan, make sure you consider these 10 useful tips.
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