Why Dealers Don't Love Doing Lease Buyouts
In a buyout, the dealership purchases your leased vehicle directly from your bank for the buyout amount, adds your vehicle into its inventory then sells it back to you for the exact same amount. The dealership will then handle your registration with the DMV and terminate your lease.
Since the dealership sells the car for the same price at which it bought it, it nets no profit. In fact, because of accounting rules at some dealerships, a lease buyout may even look like a loss of profit. That's why dealerships might refuse to do the deal for you or may suggest they will do the paperwork for a flat charge. Some dealerships will do the deal for you as a courtesy if you leased the car there, but there is no guarantee of that.
There's a way to give a dealer an incentive to help you: Get your financing at the dealership. By doing this, the dealership will receive a small payment from the bank for setting up your loan. And because car dealerships have an array of lenders to choose from, the finance manager may be able to get you a lower interest rate for the buyout loan than you can get from your own bank or credit union.
To go this route, you should first get a preapproved car loan from your own bank or credit union. It's best to know the rate for which you can qualify early in the process, even though you might end up going with the dealer's financing.
Then, to see if you can get a lower buyout amount, call a dealership that sells your vehicle's brand and speak to someone in the finance department. Ask the manager if the car's residual amount is negotiable. If it is, call the bank that holds your lease and try to negotiate a lower buyout amount. Be sure to tell the bank you'd like to buy the vehicle yourself. Most banks won't negotiate a lower buyout, but occasionally some will to avoid the hassle of taking back the car and selling it at auction. So it doesn't hurt to ask.
Finally, set up an appointment with a dealership that sells your car's brand to work out the buyout. Make it for a slow time, such as a weekday. Dealerships may be reluctant to complete a lease buyout over a weekend or on a holiday.
Ending the Lease Cycle
For millions of people, leasing is perfect. But if you'd like to get out of the leasing cycle and move into ownership, a lease buyout can be a great way to do just that. If you're currently leasing a car you love, it's in good shape and you can get a good deal, this should be the first car you consider.