If you’ve leased a vehicle and are enjoying every mile, you may consider buying your vehicle once your lease term expires. A lease buyout allows you to purchase the car you’ve grown to love, but you’ll need to consider the costs associated with this type of transaction to determine if it’s the best move for you. We’ve put together some tips on what to examine when you’re considering buying a car you’re leasing.
Determine the Buyout Amount
First and foremost, determine how much the vehicle will be worth and how much you’ll pay. You can determine the car’s current retail value by looking at a guide like Edmunds, Kelley Blue Book, or another reputable source. Once you know the value, contact the leasing company to find out how much you’d have to pay to buy out the lease. If the cost of the vehicle through the leasing company is higher than the car’s value, it may not be the best financial decision. Be sure to ask if the price includes sales tax and allows for third-party buyouts, which is when you use your own financial institution to purchase the vehicle.
Shop Around for Financing
Not all car loans are created equal. Some loans can only be used for purchasing a new or used car - not a lease buyout. As you shop for financing, check the fine print and make sure the loan you’re applying for can be used for a lease purchase. While the leasing company may offer you a loan through them, it’s always in your best interest to shop around to get the best deal.
Additionally, be sure you know where you stand credit-wise. Knowing your creditworthiness can help you avoid accepting a loan with a less than ideal interest rate or troublesome terms that might put you in a financial bind.
Don’t Forget Insurance!
Some leases or insurance companies require minimum coverage amounts on vehicles that you haven’t purchased. Once you’ve decided to buy the car in question, you may have options regarding your insurance coverage that could impact your overall payment. A change in your deductible may result in lower monthly costs, but larger expenses in the event of an accident. Be mindful of what you can afford monthly along with what you have in savings in case the unexpected occurs.
Find a Loan You Love as Much as Your Car
Buying a leased car can be worth it if you really love the vehicle or if the cost is below market value, ultimately netting you a great deal. If not, you may end up owing more than the car is worth, which isn’t worth it no matter how much you love your ride. If you’re ready to take the next step and buy out your lease, check out our low auto loan rates. For more financial tips and tricks, visit our WalletWorks page.
