Great Time to Buy Out your Lease

[javacontour]

Given high valuations and low supplies, it seems dealers may be looking for your lease return.

I’m starting to see ads such as this one. Might be a good time to buy out that lease if you can sell it for more than the residual.

Or buy it and keep driving instead of having to turn in and get a replacement at higher prices at this time.

Doesn’t apply to me as we don’t lease. But it didn’t occur to me until I saw this ad on Facebook.

 

[JeffKeryk]

Carvana will make you an offer for your equity. No sales tax, no hassle. Just get a check.
Lexus gave us $2000 (or $2,500?) when we turned in our 2018 RX450h when we bought the 2021 RX.
Matched the Carvana quote with no questions asked.

 

[joekingcorvette]

Some dealers won't let you buy out the lease when it's up. A friend just had the Honda dealership call her about 4 months before her lease was up. The dealership wanted to have her back out of the lease early and she did it because she had another vehicle of her boyfriends to drive. The car, truck and boat market is just crazy in today's world. Campers, motorcycles, almost anything is high demand right now but it won't be that way forever.

 

[Hall]

Some dealers won't let you buy out the lease when it's up

It's not up to the dealer. The vehicle is leased from the leasing company (typically the manufacturer's leasing division) and the dealer has no say-so in the deal. Now, a dealer may tell customers they can't and 99% of people will take their word for it.

 

[RAR]

Just did this with my 2019 Ram Big Horn. My buyout was $32k, and the dealer offered $41k over a text. They honored the offer after looking it over.

My 2019 had 19998 miles on a 36k mile lease that’s up in 5 months. I kept it clean, which was easier when I already had my intended replacement in a 2015 Ram 1500. But then a dealer a couple hours away across the border had a heavy duty truck I could use for even heavier hauling. So the 2015 got traded on Saturday.

Turned out I got more for each, pocketed a fair chunk of cash, lowered my insurance premiums and replaced two payments with one lower one. Plus I got my 2021 Ram 2500 Tradesman out of it.

Thinking about it and can wait a bit on the next car/truck? No brainer…

 

[SwampSurvivor]

The buyout on the 2019 Sentra we have is $9800.

This is the exact same car. 34k miles on this, ours will have maybe 13K at the end of the lease. https://www.candycars.com/used/Nissan/2018-Nissan-Sentra-2128d2610a0e0a6b2525487dabc84734.htm

Oh and ours really hasn't been driven in the snow! No rust after 1.5 winters.

 

[daves87rs]

Even before all this crazy, there was a very good chance that we were going to buy our lease when it was up at the end of the year. I leased our Nox for two reasons: Wanted to see how the turbo held up, and we weren’t sure what the wife’s replacement would be. And thanks to last year, it’s low mileage too. I also will have my son learning how to drive in the next few years a well. Would make a good extra ride! So unless we get a surprise- we will keep our Equinox. Already had money put aside in case we bought it. I’m pretty sure they won’t fight us keeping it either....granted the auto companies could change the rules.....

 

[javacontour]

Some dealers won't let you buy out the lease when it's up. A friend just had the Honda dealership call her about 4 months before her lease was up. The dealership wanted to have her back out of the lease early and she did it because she had another vehicle of her boyfriends to drive. The car, truck and boat market is just crazy in today's world. Campers, motorcycles, almost anything is high demand right now but it won't be that way forever.

Your contract is usually with a finance outfit, not a dealer.

I can see some saying you cannot, meaning they won't process a buy out.

Do you really need to go through a dealer to buy out or just send a check to the lease company for the residual if it is to your advantage.

 

[Andrew1972]

Curious on lease buyout. You have no title or equity in the vehicle so you have to arrange with lease company to make the transaction happen of buyer funds to get title?

 

[JTK]

I didn't think about this given our current vehicle market.

Like said above, it depends on your specific lease contract, but the 2 leases I did over the years, it was as simple as sending a check for your pre-determined buyout amount including any residual payments to the bank that was holding the lease and the vehicle was yours.

Lots of people with late term leases could make out if their contract buyouts were reasonable.

This is going back a number of years, but I used my lease turn-ins as leverage. This was a Honda and a Subaru. Both were over miles and had worn tires. I had first picked out a vehicle on the dealer's lot that I wanted. I told them I'll buy that vehicle if and only if you take in my lease free and clear. If not, no big deal to me. I'll move on. They did it.

 

[JeffKeryk]

Curious on lease buyout. You have no title or equity in the vehicle so you have to arrange with lease company to make the transaction happen of buyer funds to get title?

You may have equity; a type of equity. Say you lease for 3 years and 36K miles.
A perfect car with 10K miles is worth more than the same car with 36K miles. You have purchased 36K miles.
The vehicle is worth what the market will bear.
The end of lease purchase of our '18 RX450h was like $33,200. Carvana offered us $2K more, or something like that.
So we would get a check for the $2K and they do all the work with Lexus Leasing Company.
I pay no sales tax, registration, etc.
Now, this is a sought after vehicle, white on black, loaded and low miles. Lexus matched the Carvana offer with no questions asked on a new RX450h purchase.

A private sale may be different. Talk to the leasing company.

 

[Wolf359]

Curious on lease buyout. You have no title or equity in the vehicle so you have to arrange with lease company to make the transaction happen of buyer funds to get title?

The residual price is set in advance. It's basically the same as buying a car. If you had bought a car 3 years ago, it'd be worth more now than if this were a year and a half ago before the prices spiked. Usually the residual is such that it's cheaper to just turn the car in at end of the lease. That means you paid less for the lease because the residual was too high. In this case, if the residual is higher than market value, that means you paid more in monthly lease payments. You basically have an option on the vehicle, if you drove it less or the value of the car is higher due to market conditions, you have the right to buy the car at the agreed upon residual price. The residual was used to calculate the monthly lease payments.

 

[JeffKeryk]

@Wolf359 is right. A lease is simply paying for the asset depreciation.
They usually want the buyout to be a little on the high side, so you might choose a new car.
If you buy it out, they do well as well.

In today's upside down world, the extra high demand is driving up prices so lease buy out prices are generally a better bargain than in "normal" times.

In the case of our '18 RX, I'm sure Putnam Lexus had buyers lined up. They told me they could had good ICE RXs, but zero hybrids. A white on black, low milage RX hybrid was gold...

 

[CKN]

The residual price is set in advance. It's basically the same as buying a car. If you had bought a car 3 years ago, it'd be worth more now than if this were a year and a half ago before the prices spiked. Usually the residual is such that it's cheaper to just turn the car in at end of the lease. That means you paid less for the lease because the residual was too high. In this case, if the residual is higher than market value, that means you paid more in monthly lease payments. You basically have an option on the vehicle, if you drove it less or the value of the car is higher due to market conditions, you have the right to buy the car at the agreed upon residual price. The residual was used to calculate the monthly lease payments.

This is why a dealer cannot tell someone they can't buy their leased vehicle. BTW-prior to COVID there were a high percentage of leases that ended that resulted on a new lease on another (new) vehicle. One situation in a lease not mentioned-is you drove so many miles in excess of the allowed miles in the lease-you may want to consider buying it and hopefully building enough equity (or at least break even) to sell the vehicle in the future. Otherwise there are major consequences ($$) for turning in an over the allotted miles vehicle at lease end.

 

[Wolf359]

This is why a dealer cannot tell someone they can't buy their leased vehicle. BTW-prior to COVID there were a high percentage of leases that ended that resulted on a new lease on another (new) vehicle. One situation in a lease not mentioned-is you drove so many miles in excess of the allowed miles in the lease-you may want to consider buying it and hopefully building enough equity (or at least break even) to sell the vehicle in the future. Otherwise there are major consequences ($$) for turning in an over the allotted miles vehicle at lease end.

You can usually pay for the excess mileage in advance some manufacturers only charge an extra 10 cents a mile and some do 25 cents or more depending on if you do it before or after lease end.