When you come to the end of your vehicle lease term, you have the option to turn the car in upon the completion of the lease or you have the option to perform an auto lease buyout and purchase it outright. If you are considering a purchase, there are some things to look out for to make sure you are getting the best deal possible.
The first thing to be aware of, if you are interested in buying your leased vehicle at the end of the lease term, is the residual value of the vehicle. Also called lease-end values or the lease-end purchase price, the residual value of your leased vehicle is simply the wholesale value of the car at the end of the lease term. This price is set by the company financing the car lease and is an expert guess as to what the car will be worth at the end of the lease term. It is typically based on expected depreciation, historical demand for that model, and the effect of expected mileage on the car’s value.
Typically, the cost of your auto lease buyout is based on the residual value and an additional purchase-option fee. If you are interested in purchasing your leased vehicle, the best tactic to take is to wait for the leasing company to call you toward the end of the lease and broach the subject of a lease buyout. From this position, you have a little negotiating power. This is when you can ask about purchase incentives. For example, you can ask if they would lower the purchase price. You could also ask if they would remove or lower the purchase-option fee. Asking if they will offer a discount financing deal on the lease-buyout loan is another question you can ask.
Prior to hearing from the leasing company, do some research on the current value of your vehicle and shop around for financing options for a lease-buyout loan. This will give you a little more negotiating power to work with when the leasing company does call about your intentions. With leasing companies typically open to selling the leased vehicle upon the end of the term, you are likely to find yourself with a good chance at a favorable deal if you are prepared with current vehicle data, are knowledgeable of your lease’s terms, and are aware of the market’s current financing rate.