Does A Lease Buyout Make Sense For You?
If your lease is almost up or you’re thinking about a lease-end buyout to keep or resell your vehicle, you may be wondering if it’s the right move. With a limited selection and higher prices in the new and used car market right now, the best deal may be on the vehicle you are already driving. CBS News reported that used car and truck prices shot up 37% last year, with the average used vehicle now costing $29,000 according to Edmunds.
You can quickly and easily compare prices on various vehicles on Spirit Financial’s CarShop 365 site. You’ll find vehicle and dealer information, as well as information on auto loans and auto loan refinancing.
Is a buyout an option in your auto lease agreement?
If a buyout option was part of your lease agreement, you typically have the option to purchase the vehicle at the end of the lease. The lease contract you initially signed should have a “buyout amount” or “payoff amount”. If your lease is ending and there has been no damage to the vehicle and you are not over the mileage, the amount should be accurate. The alternative to buying the vehicle is returning it to the dealership.
If you are still paying on your lease and are considering an early lease buyout, the buyout amount is calculated by adding the residual value of your vehicle at the start of the lease to the remaining payments, as well as a fee if applicable. Typically, when you are at or near the end of your lease you can negotiate the purchase price. In today’s car market you may be able to negotiate an early out as well.
Determining your car’s value
It’s important to do your own independent research to determine value. Finding the value of your vehicle is easy with the use of an online value estimator. Kelley Blue Book (KBB) is a great way to determine if your buyout is actually equal to the value of your car. For the value to be truly accurate, you need to be honest in your input of the current condition of the vehicle. KBB takes that into consideration, as well as pricing information from used car prices, market trends, economic conditions, and location. You may see a few different value options, including trade-in value, private resale value, and dealer retail
With vehicle shortages leading to higher prices, you are probably finding that a lease buyout is your best option. When you decide to buy your leased vehicle, Spirit Financial has a low-rate auto loan to fit your needs.
Considerations before buying out your lease
• The mechanical/accident history of the vehicle.
• Are you facing excess mileage charges?
• Are you facing excess wear and tear charges (the condition of the vehicle will impact the value)?
• If you are looking for an early lease buyout, are there any fees involved?
• Is it possible for you to secure financing to buy out the lease?
When determining when a lease buyout makes sense, it comes down to simple math. If the estimated cost to buy out the lease is more than you would pay for the same vehicle from a dealer, then a lease buyout may not be a smart choice. On the other hand, if you are facing the prospect of paying a cost for excess mileage or for damage to the vehicle, buying the vehicle might be a better option. Furthermore, when the market for used vehicles is as hot as it is now, and prices are on the rise, you may find the best deal is the vehicle you currently have.
Financing a lease buyout – Shop around for a good auto loan!
When looking to purchase your leased vehicle, it’s smart to shop lenders for the best rate and auto loan deal. While the dealer may want you to finance through them, chances are you will find a much better auto loan elsewhere. This is especially true if you have a good credit score. Spirit Financial Credit Union is a great place to start. Tap to view rates and learn more about a Spirit Financial auto loan or auto loan preapproval.