3 Reasons Buying Out Your Car Lease Is a Good Idea in 2023
Drivers who leased their cars back in 2020 are coming up at the end of the term this year. Fortunately, they have options, including buying out the lease for the specified residual amount that was originally agreed upon. In fact, lease buyouts are getting more popular as car prices and interest rates remain high. Here are three reasons why buying out your car lease this year could be a good idea.
1. If the car is worth more than the lease buyout price (residual)
Looking at the original contract you signed when you leased your car, you’ll notice a line item that says “residual amount.” This amount is pre-determined by the automaker and reflects how much they think the car will be worth at the end of the lease term. According to Credit Karma, “It’s typical for a lease agreement to have the option to buy the vehicle for its residual value when the lease ends. If your car is actually worth more than its estimated residual value, that will make it a great deal”
For example, if your car’s residual value is set at $10,000 but worth $15,000 at the end of the lease term, it’s a good idea to buy it out. After doing so, you can either keep it and enjoy it for longer or sell it for a profit.
2. If you have surpassed the mileage allotment of the lease
Every lease has an agreed-upon mileage allotment for the lease term. In most cases, the allotment is set at 10,000 to 20,000 miles per year, which can be tough for some commuters to adhere to. If your car ends up over the mileage allotment, you will be charged for every mile over the limit. However, you won’t incur extra charges if you buy out the lease for the agreed-upon residual amount.
3. If the market is high, buying out your lease could be a good idea
Lastly, if the car market is high, buying out your lease could save you a few headaches. For example, Kelley Blue Book reported that the average price of a new car in December 2022 was a whopping $49,507. Add high-interest rates to that equation, and you can see why buying out your leased car for a set price is a good idea.
Buying out your car lease in 2023
If your car’s lease is ending this year, you have some options. However, trading it in for a new car or selling it may not be the most viable option, so buying it out could be the best way to go. If you’re unsure whether or not you should do it, see if these three reasons fit your current car lease situation.