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Why and How to Buy Out a Lease on Your Car

Woman and Two Kids Sitting in Back of Car During Snow

If you’re looking for your next car, you may have noticed that car inventory is low. If you’re currently leasing your vehicle, you may have more options at the end of your lease than you think. In fact, the best car for you may be the one you already have.

Enter the lease buyout. With used cars retaining their value these days, here is what you need to know about this often-overlooked car buying option—when it makes sense, what to consider, and how to do it.



Before just turning in your car when your lease term is up, you should consider all your options. Generally speaking, there are three options when your lease expires:

  1. Turn in the vehicle. Walk away, no strings attached.
  2. Trade the car in. Use the trade-in value toward another lease or a purchase.
  3. Buy out the lease! Purchase the vehicle from your lease company for the price agreed upon at the start of the lease.

That said, not all contracts are written the same way. You’ll want to verify the options available to you in your particular lease.


I can’t tell you the emotional reasons to keep the car you named “Tammy.” But there are a couple of instances where buying out your lease makes financial sense:

  1. Avoid penalty fees. If you went over mileage or had excess wear and tear during your lease, you may face some additional fees. But did you know you don’t just have to give the car back and pay the penalties? Instead, you can head to your nearest credit union or bank to refinance and purchase the car. If you’re buying the car from the lease company, they don’t care about the penalties.
  2. The car has greater value than the lease buyout price. Barring any excessive mileage and/or damage to your vehicle, your car may be worth more than you (and the lease company) originally thought. The residual value—how much the car will be worth at the end of the lease term—is determined upfront based on a number of factors, including the length of the lease and the estimated mileage. This is used to calculate your monthly lease payments as well as the lease buyout price.

With many used cars holding their value in recent years, your leased vehicle may be worth more than the residual value if you’re under mileage. In that case, it could be worth buying it outright at the end of the lease. You’ll either end up getting to keep your car for less than market value or be able to turn around and sell it for a profit.


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In addition to any fees for mileage overages or excessive damage, there are a few other considerations when buying out your car lease. Here are three questions to ask yourself before purchasing your leased vehicle:

  1. Does this vehicle still meet my needs? If you’re planning to keep the car, this is the most important question of all. Does it still fit your lifestyle? Does it have enough space for the additions to your family? Do you still like the look and feel of the car? If not, it doesn’t really matter how much value you’re getting from the lease buyout.
  2. Do I want to be responsible for the taxes and fees from the Department of Motor Vehicles (DMV)? When you buy out your lease, you will be responsible for any DMV taxes and fees. While not exorbitant, they are an added cost to factor into your decision. These can often be rolled into your new car loan and included in your monthly loan payments.
  3. If I turn or trade-in my leased vehicle, can I get what I want at a reasonable price? Your car may be worth more, but that also could mean that you will pay a higher price for another automobile. You’ll want to consider the value of both vehicles to make sure the trade-in makes sense financially. It’s also important to remember that value can be a fickle thing. The economy and the market aren’t always stable, and prices may drop when supply equals or exceeds demand.



If you are interested in a lease buyout, here are the steps to take:

  1. Contact the lease company to determine the cost of your lease buyout. Don’t forget to factor in the DMV fees as you compare the cost to your lease contract!
  2. Contact your local credit union or bank to see how the book value on your vehicle compares against the lease buyout price. If you’re satisfied by the financials, you can start the process of getting preapproved for an auto loan. (Before you start rate shopping, however, read this article to learn the benefits of working with a local lender and why getting the lowest rate isn’t so important.)
  3. Contact your dealership and let them know you wish to purchase your car. Be prepared for some heavy sales tactics heading into the conversation, especially if you have built equity in the automobile—they also will recognize the value your car has and would like to profit on its equity as well! This is especially true when inventory is low and well-maintained, low-mileage used cars are very attractive in the marketplace.
  4. Drive away with your “new” car! Even if your car already may be sitting in your driveway, take a celebratory lap at becoming a vehicle owner and getting a deal at the end of your car lease.

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Josh Dobrovich

About Joshua Dobrovich

Joshua is the consumer lending team lead at VSECU. He supports the consumer lending team in all areas of the lending process and helps members obtain credit and financing to achieve their personal goals. Joshua has an extensive background in automotive. He has been the service manager and, most recently, business manager at The Automaster Honda in Shelburne VT. Joshua and his partner Jennie have two awesome daughters Kyla and Rylin and live in central Vermont.
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