Should You Opt for a Lease Buyout?
Leasing a car can offer flexibility and may provide a lower-priced option for those who want to drive high-end automobiles. Leases typically extend for about three years. When the lease is termed, individuals can decide whether or not they want to buy the vehicle. This is known as a buyout.
Should you opt for a lease buyout when the lease ends? There are a number of factors consumers should consider:
- The condition of the vehicle
- The price of the buyout
- The financing options for a buyout
- The vehicle’s driving experience
The Details of Leasing
A lease is a short-term agreement, and, typically, it only extends for about three years. Some drivers prefer leasing as they are able to drive the vehicle during its prime. When the lease expires, they may decide to simply return the car and enter into a new lease.
Under the lease contract, basic maintenance like tire rotations and oil changes are handled by the dealership. This can provide some savings for the driver, but the lease also has other stipulations. Lease contracts include mileage limitations, and every mile over the agreed-upon distance leads to fees.
Leasing a vehicle also leads to lower monthly payments when compared to buying the car. Buyers might be able to afford a better or higher-priced car when they decide to lease.
While the dealership agrees to handle some basic maintenance, the driver is expected to maintain the car’s overall condition. A car that is returned in a less than ideal condition may mean extra charges for the driver.
About a Lease Buyout
When the lease comes to an end, some buyers just return the vehicle and perhaps buy a different vehicle. Others return the vehicle and enter into a lease for another new vehicle. However, drivers also can elect to buy the vehicle that they were leasing.
A lease buyout is addressed in the lease contract, and buyers who are interested in purchasing their car can consult their contract to find the buyout price. Whether or not the driver should opt for a buyout depends on many factors.
Chase recommends that those thinking about buying their car should research the value. If the buyout is less than the resale value of the car, then the buyout might be a good deal. However, Chase notes that buyers also need to consider the condition of the vehicle and the mileage, too.
The Condition of the Vehicle
The vehicle’s condition could be an important factor when a driver is considering the buyout. Chase explains that if there is a lot of wear, a buyout might mean that the buyer won’t be burdened with those charges.
As the condition of a returned leased vehicle could lead to more fees or charges, it could make more financial sense to buy the vehicle.
The Price of the Buyout
One of the most important factors that potential buyers need to review is the price of the buyout. Again, buyers should research the value of the vehicle. Use Kelley Blue Book (KBB) to estimate the vehicle’s value.
When demand for used vehicles is high, the value could be high, too. If the value is greater than the buyout price, this could be a good deal for the buyer.
How is the buyout price determined? The buyout price reflects the car’s residual value, which is the price that the vehicle is expected to be worth at the end of the lease.
Financing the Buyout
When considering a buyout, potential buyers might need financing. There are buyout loans available to finance the purchase of a leased car. Like all loan decisions, though, potential buyers might consider their options.
Is the interest rate decent? Are the monthly payments affordable? Buyers can compare different loans to find the best one to finance the buyout.
While potential buyers could find that the buyout price is reasonable and they may be able to secure financing, the biggest question that drivers might ask themselves before agreeing to a buyout is related to the driving experience. Was the car enjoyable to drive? Is it comfortable? Are there any annoying issues?
Ultimately, agreeing to a buyout means that the driver will now take ownership of the car. This is the car they will be driving for several more years. Even when the buyout price is good, if the driver didn’t love the car or enjoy driving it, is the buyout a good idea?
When potential buyers are on the fence, they might look around at similar models from different brands. Maybe they take a few test drives. Comparing and considering other options could help a driver figure out if a buyout is a good decision or if, perhaps, they might want to consider buying a different model or maybe entering into a new lease.
Buyouts aren’t for all Buyers
Leasing provides an arrangement that is similar to a long-term rental. Some buyers adhere to all the stipulations of their lease agreement. They don’t go over the agreed-upon mileage, and they maintain their car to ensure that it stays in the best condition possible. These drivers might prefer leasing to buying. Some buyers love the impermanence of a lease.
These drivers might never consider a buyout. Lease options are popular for a number of reasons. Leasing typically offers a lower monthly payment, and drivers don’t have to be concerned about handling oil changes. When the lease ends, drivers can return their car.
Drivers may end one lease and move on to another. Some drivers love a particular car, and when the lease ends, they lease the newest model year of that car. Leasing provides options for those who just don’t want to commit to ownership, and some love this flexibility. Electing to not buy the car might simply be a driver’s preference. Owning a car isn’t for everyone.
How Can Buyers Find Cars to Lease?
Drivers whose lease is about to expire might be looking for another model to lease. Maybe they just didn’t love the car they are currently driving, and they want to explore other brands and models to lease. Those interested in their lease options can use Carzing to explore different models.
While many use Carzing to buy a car, the site also lets buyers search for vehicles available to lease. Search by make/model, price, or body type. Carzing will show an extensive list of choices, and consumers can use the menu to the left of the search results to choose to view only those cars available to lease.
When buyers find their ideal car, they can use Carzing’s Lease Calculator to estimate payments and better understand the financial bottom line of leasing. Then they can schedule a visit to the dealership and take a test drive of their top choices.
If drivers have decided that leasing is no longer their best option, they can use Carzing to find a vehicle to purchase. Buyers also can use Carzing to get pre-qualified for financing. Buyers can review all their loan options to find the best terms and the lowest available interest rate. Carzing also helps buyers understand their down payment obligations.
Whether consumers are looking to lease or buy, Carzing can help them take control of all their options. Find financing, understand lease costs and drive off in the best deal with the help of Carzing.