back to articles | September 08, 2019 | Greg Thibodeau

Categories: Loan Calculators & Rates Leasing a Car Types of Car Loans The myAutoloan Difference

How to Handle a Car Lease Buyout Negotiation

Your car lease is nearing its end, but you’re not ready to give up the car you’ve come to know and love. Thankfully, you have the option to buy your leased car, potentially for less than the amount outlined in the lease. How is this possible? Play your cards right, get a competitive lease buyout loan, and you could negotiate a great deal on a car lease buyout. Just keep the following tips in mind when approaching the end of your lease!


Tips for Car Lease Buyout

1. Let the leasing company reach out first.

The leasing company will usually call about 90 days before your lease is set to expire. If you reach out to them before this time, you could spoil your room for negotiation–like showing your hand at a poker game.

In the meantime, read the fine print in your lease agreement to prepare yourself for the buyout process. Look for language related to how the leasing company handles lease buyouts.

  • What fees might they charge?
  • Will buying out the lease early lead to a fee?
  • Is there a purchase option fee?
  • What did you originally agree to when you signed the car lease?
  • Do you have to buy the car within a certain period of time?

2. Make sure buying your leased car makes financial cents!

Don’t put your car lease away just yet. A majority of lease agreements outline exactly how much you can buy your leased car for at the end of the contract. This is the “payoff” or “buyout” amount. You may also be able to find this number on your online account or monthly statement, or by asking the bank that holds your lease.

The “buyout” amount is calculated at the beginning of your car lease. It’s the leasing company’s best guess at how much your car is worth at the end of the lease + the value of any remaining payments + a purchase fee (if any).

Compare the “buyout” amount to the market value of your vehicle to figure out whether you’re paying a fair price for your leased car.

You can easily plug in the vehicle details on Kelley Blue Book to get this amount. If your buyout amount is pretty close to (or fingers crossed, less than) the market value, then you’re set up for a great deal on your car lease buyout–no negotiation required!

If your buyout amount is greater than the market value, you could still be getting a fair deal if your end of lease fees (like for extra mileage, extra wear and tear, etc.) are high.

“Buyout” amount aside, you can’t put a price on the peace of mind. You know how and when the car has been serviced, how its been driven, and where its been. For some drivers, that peace of mind is worth paying for.

3. Don’t pay more fees than you have to.

There are three end of car lease fees you may be asked to pay: an early termination fee, purchase option fee, and disposition fee. While it depends on your situation, you may have some negotiating power when it comes to car lease fees.

  • Early termination fee: If you try to buy your leased car before the lease is up, you’ll almost certainly be charged an early termination fee. The leasing company wants you to wait until the end of the lease, so there’s a slim chance you can wiggle your way out of this fee. Wait until the end of the lease term to buy the vehicle to avoid an early termination fee altogether.
  • Purchase option/buyout fee: This fee is typically a few hundred dollars. It allows you to exercise your option to buy the leased car. There’s a small chance that this fee is negotiable. If you’re financing your leased car purchase, you can usually roll this fee into your loan payment.
  • Disposition fee: A disposition fee is charged when you return your leased vehicle. In other words, you’re not going to buy it. This fee goes toward reselling your vehicle. It’s non-negotiable. You won’t need to pay a disposition fee if you choose to buy your leased vehicle.

You can’t avoid all fees when buying a leased vehicle, but you can probably avoid some of them. Double check your lease agreement and remember: it never hurts to ask!

4. Compare lease buyout loans.

Shop around for financing on a lease buyout loan to find the best interest rate and terms. That way, if the dealership or leasing company wants to finance your buyout loan, it will have to beat the best deal you found on your own. That could mean serious savings for you.

Just like you would with a new or used car loan, consider your loan term. A shorter term comes with higher monthly payments, but lower interest charges over the life of the loan. A longer term comes with lower monthly payments, but higher interest charges. Comparison shopping can help you find the best balance for your budget.

Are you ready to start the car lease buyout process? Start with myAutoloan to compare up to four lease buyout loans today.