Buying Out Your Car Lease Could Be a Good Idea In 2022
Did you lease a new car a few years ago and are now coming to the end of the term? If so, then it may be a good idea to buy it out. The used car market has inflated car values in the past year, which means that the car you leased three years ago may actually be worth more now than the manufacturer originally expected when you signed the lease. In that case, buying out your car lease can be the way to go in 2022. Here’s how to do it.
You can buy out your car lease through a dealership or on your own
If you decide that you want to buy out your car at the end of its lease term, then you can either go through a dealership or do it on your own. The price of the car was already set when you signed the lease – it’s also known as the “residual value,” “buyout amount,” or “purchase option price.” According to Credit Karma, when you choose to buy out your lease, you will pay the purchase option price plus any additional fees or taxes.
When it comes to actually buying the car, you can either buy it through one of the manufacturer’s franchised dealerships or call up the leasing company – which is typically through the manufacturer – and buy it out. However, there are pros and cons to each option.
Buying out your car lease from a dealership can cost you extra
While some manufacturers allow you to buy out your car lease yourself – by calling the leasing company – others do not. In that case, you would have to visit your local dealership to buy the car and process the paperwork. However, one thing to note is that some dealerships may charge you extra fees for doing so.
According to one story from ABC 7 in New York, two car owners – Anton Shipman and Keri Cromer — spoke about how the dealerships that facilitated their lease buyouts charged them thousands of dollars over the agreed-upon residual value. Cromer reported that her son went to the dealer to buy out the car only to return home with an invoice that was inflated by $3,200.
Shipman had a similar story, reporting that his dealership charged an extra $3,000 to the car’s residual value for a “processing fee.” He ended negotiating the fee down to $1,000 but afterward reported his story to the news station. After ABC 7 was able to contact both dealerships, both of the customers were able to get some money back.
However, this story doesn’t mean that you should never buy out your leased car from the dealership. Instead, it means that if you do, you should be aware of all of the charges on the invoice and be prepared to dispute it if it doesn’t add up.
Buying your car from the leasing company can be a better option
If you’re able to purchase your leased car directly from the leasing company, then do it. You can find the phone number of the leasing company on the lease contract and call them to find out the final purchase price for the car. Afterward, they will be able to tell you how you can pay for it and when the title will be released to you.
As you can likely tell, this process is much easier than going through a dealership to do the same thing. However, just note that not all manufacturers allow this, so be sure to check your car’s lease contract before doing so.
Is it really worth it to buy out your leased car?
In these current market conditions, yes. Most used cars are commanding higher values right now, so it’s likely that the car you leased three years ago is worth more now. Although, that might not always be the case, so be sure to obtain your car’s buyout amount first and then check it against the current market value for the car. If the market value is lower than the buyout amount, then consider a different option. But if it’s higher, then buying it out could be your best option.