Car Lease Buyout: How Does It Work?

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What is a car lease buyout?

A car lease buyout is when you purchase the vehicle you’ve been leasing. When a car lease is up, you typically can’t sign for more time — you can either turn in the vehicle, trade it in for another car or buy it. If you’d like to do a lease buyout, you could pay cash or get a lease buyout loan.

A lease buyout loan can be easy to get  — you don’t have to have the vehicle inspected.

Car lease buyout rates

Company Starting APR Amounts Terms (months)
Autopay 1.99% $2,500–$100,000 24–96
MyAutoLoan 1.99% $8,000+ 24–72
rateGenius 2.99% $10,250–$55,000 36–72
Bank Of America 4.99% $7,500+ Up to 72
LightStream 5.99% (with AutoPay) $5,000–$100,000 24–84*

*Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of 3 years would result in 36 monthly payments of $295.20.

How a lease buyout works

STEP 1: Decide on a buyout

Three months before your lease ends, the lease provider should contact you to go over your lease-end options. If the provider does not contact you, you should reach out to them. Typically, there are three options for you to choose. Use a car loan calculator to run some numbers as you consider them.

Lease buyout

Buy your leased vehicle. Look in your lease contract or contact the lessor to find out how much the car will cost. The car’s price at the end of a lease is called its residual value.

Lease turn-in

Return the car, pay any fees and walk away. If you’re unsure what charges you may face due to excess mileage or wear and tear, ask for a pre-inspection estimate on any repairs. Many lessors automatically offer this for free.

Lease trade-in

Trade in your lease to immediately lease or purchase another vehicle. You don’t have to go back to the same automaker to do this and you could score incentives on a new vehicle, such as a lease trade-in rebate.

STEP 2: Arrange for a loan

With one month or less to go before your car lease ends, arrange for financing if you want or need it. Most auto loan approvals are good for 30 days, which is why you want to apply for them when you have only about a month left on your lease.

And shop around for a buyout loan! The three main credit bureaus allow a time window of at least 14 days for consumers to rate shop. Applying to several lenders won’t hurt your credit any more than applying to one lender, as long as you do so within that two-week window.

STEP 3: Sign the paperwork

Once you have chosen the right loan offer for you, your new lender should contact the lessor and guide you through completing the paperwork. They may send you a check to pay your lease provider, or directly send a check to the lease provider.

Why choose to buyout your leased car

If you can get a good deal

If you can buy the car for less than it’s worth on the market, it’s probably a good deal. Compare the price at which you can buy your leased car (its residual value or lease-end value) to how much the car is actually worth. Use Kelley Blue Book or Edmunds to find its current retail value. If your car is worth more, you probably have a good deal on your hands.

If it fits your budget

No matter how good a deal looks on paper, it needs to be affordable in real life. Current car prices, as of 2021, are booming. Doing a lease buyout may be the most affordable option to secure private transportation.

If you’re facing high turn-in fees

If life was rough on your leased car and it has significantly more miles or more wear and tear, a lease buyout may be better than paying the fees for exceeding lease limits. Remember, you should be able to get a pre-inspection from your leasing company that estimates fees and lists repairs. If you get it early, you could have repairs made by an independent mechanic who may charge less than the official dealership.

If it still meets your needs

Sometimes we need different cars at different points in our lives. For example, if your kids are off to college, why stay in a minivan? But if your leased car still fits your lifestyle, why change? If you continue to take good care of it, it will probably last a long time, whereas buying someone else’s used car might be a riskier option.

Car lease buyout FAQ

If you refinance your car lease, you’re essentially doing a lease buyout. Doing so may help you lower your payments or get a lower APR. If you don’t love the car, though, there are other options to get out of a car lease early.

Car leases work when you agree to pay a set amount to use a vehicle over a set term, usually three years. You could pay the entire lease amount upfront, in what’s called a single-pay lease, or you could get a loan and make monthly lease payments. Here’s more detail on how car leasing works.

Lease buyout loan rates tend to be similar with regular auto refinance rates and can go as low as 1.99% as of September 2021.