What Is a Lease Buyout?

When your lease is coming to the end of its term, you have two options to choose between. Either you can return the vehicle to the dealership and settle any remaining fees or you can negotiate a car lease buyout. What is a lease buyout exactly? The basic lease buyout definition is when a dealership allows you to purchase a vehicle at or before the end of a lease contract, at the price of its remaining value. There are two options when it comes to a car lease buyout and it’s a good idea to know which will work for you. Be sure to explore the different types to see which works best for you, then make your way to Mercedes-Benz of Warwick near Providence.

Lease Buyout Definition: Lease-End Buyout

In terms of car lease buyouts, this is the most common option. At the end of your lease, you can pay what the vehicle is expected to be worth by the end of the lease period. This is usually a price point that is agreed upon before you sign the lease agreement. It’s a great option if you are happy with the vehicle, have required little to no repairs since you’ve had the car, and can get a good interest rate to finance the buyout price.

Another benefit of this option is knowing the condition and history of the vehicle you’ve been leasing, unlike when purchasing a different pre-owned car.

Lease Buyout Definition: Early Lease Buyout

In this case, you can buy the vehicle prior to the end of the lease. This isn’t allowed in all contracts so you’ll want to check yours before pursuing this option. Prior to considering an early lease buyout, you’ll also want to be sure that it’s worth the long-term investment to buy instead of lease. In this case, the price is determined by the lease-end residual value on your original contract, as well as:

• The amount you still owe on the lease
• If the vehicle has depreciated quicker and is below market value, you might have to pay the difference

This option is best if you are concerned about lease penalties like going over mileage, not maintaining scheduled services, or damages to the interior or exterior of the vehicle.

How Does a Lease Buyout Work?

So, how does a lease buyout work? If you want to own your vehicle and you think a car lease buyout will work for your budget and finances, here are the beginning steps you can take:

• Speak to your leasing institution. When you’re nearing the end of your lease, reach out to the institution you’re leasing with to inquire about your options. They can tell you more about how a car lease buyout works with them, including whether there are any fees associated with facilitating a buyout.
• If you’ll be financing the buyout, apply for pre-approval. Some East Greenwich drivers choose to pay for their car lease buyout in full if they’ve been saving for it, but there are also car lease buyout loans available. If you plan to finance your lease buyout, now is a good time to apply for pre-approval with a few lenders to see how you qualify. Often, you can secure financing through the same dealership you had your lease with, but you can explore your own options, too.
• Negotiate and finalize the buyout. There may be flexibility to negotiate your car lease buyout down to a lower price. After you’ve settled on a price you feel comfortable with and secured your financing, all you need to do is finalize the buyout!

Explore Your Car Lease Buyout Options with Mercedes-Benz of Warwick

After exploring the questions regarding, what is a lease buyout? You can explore the options that work best for your Cranston life with our team in Warwick. Between the two car lease buyout options, assess your car loan, the wear and tear, and the purchase price to see if this investment is worth it for you. If you still have questions, feel free to contact us!