Buying Your Leased Car
At the end of your lease, you might decide you want to buy your car and keep it. There may be many reasons for you to do this. For example:
- The buy-out price in your contract makes buying the car a great deal.
- You know the car's mechanical history and know it's very reliable.
- You don't want the hassle of starting a new lease or shopping for a new car.
- You've exceeded the number of miles allowed and want to avoid a penalty.
- There is excess wear and tear on the car, and you want to avoid extra fees.
The simplest way to buy your car is to check its residual value in the lease contract. Once you know what you can buy your car for, check the Edmunds.com True Market Value® price. Is the TMV® price the same or higher than the residual value of your car? If so, this might make a good deal for you.
However, if the TMV price is less than the residual figure in the contract, don't despair. You can always try to negotiate a lower price for your leased car. Keep in mind that the leasing company really doesn't want that car back. They would like you to buy it and might sweeten the deal to tempt you into doing so. Some lease companies firmly refuse to do this. Others are flexible. It doesn't hurt to try.
Here at Edmunds.com, we have bought several vehicles at the end of their leases. Each leasing company had a slightly different process for doing this. But, in at least one case, we saved a lot of money by doing this. For more about a specific experience, read about the lease buyout for our Honda Odyssey.
Tips on Buying Out a Leased Car
Your first step is to call the number listed on your monthly payment slip. You will usually reach an automated phone menu. One of the choices is for "lease end options." When you reach a human being, tell them you want the "buy-out amount" for your leased vehicle. The buy-out amount may be slightly different from the residual because they will deduct your security deposit. Also, bear in mind that if you call several months before the lease ends, they will give you a buy-out amount for that date, not the end of the lease.
If you want to negotiate a lower buy-out amount, you need to make sure you are talking to someone with the authority to make a deal. Furthermore, if you are going this route, you should have a figure in mind at which to start negotiations. Here's how to arrive at that figure.
You have to assume that, if your car is returned, the leasing company will either:
- Let a dealer put the car up for sale as a used car, or
- Ship the car to an auction and accept the wholesale price.
If the car is shipped to an auction, the leasing company has to pay an auto transport company to move the vehicle, and accept whatever is bid for it. This is likely to be far below the residual value of the car. This puts you in a good position to negotiate. Furthermore, the popularity of leasing has created a glut of good used cars coming off lease. This has lowered the prices of used cars.
When you've set a starting point for negotiations, call the leasing company and make your offer. They will either counter-offer or ignore your offer. However, leave your phone number and give them time to call you back.
As you talk with the leasing company representative, don't tell them you are over the allowed mileage limit, or that there is excess wear and tear on the car. If they know this, they will realize they have you over a barrel and might demand a higher price for the car.
Allow several weeks to negotiate a buyout figure for your leased car. And assume that the negotiations will probably go right up to the return date for the car. If negotiations look like they will continue, you can always arrange an extension of the lease.
Buying your car at the end of a lease is usually a win-win situation for you and the leasing company. Just make sure you have reached a fair price for the buyout and know about any other related fees before you agree to the deal.