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When leasing a car, truck, or SUV – dealers give the option to “buy out” the vehicle at the end of the lease contract. This lease buyout is set at the vehicle’s residual value.
Why is it a good idea to buyout a lease?
- You can avoid paying annoying “end of lease” fees and charges.
- You may evade stressful negotiations with the dealership.
- You get to stay in the car you know and love.
Understand the options and contractual requirements you’ll be required to meet to decide whether a lease buyout is a good fit.
What is Residual Value?
Residual value is the vehicle’s expected value at the end of the lease. This value is often agreed upon at the beginning of the lease and written into the contract. Knowing this exact value is helpful in identifying if a lease buyout is a good idea for your situation.
Is It a Good Deal?
First and foremost, compare the car’s residual value (buyout price) to its true market value. The residual value should be similar to the value of the same vehicle in a similar condition. The lease buyout is a good deal if:
- The buyout price is less than or equal to the market value
- You can receive a good interest rate on the buyout loan
- The vehicle’s overall condition, performance, and state of repairs is satisfactory
How to Buyout a Lease
Once you determine that your lease buyout is a good deal, the next step is to apply for financing. At RateGenius, one of our specialties is lease buyouts. We handle the process from application to titling.