Can You Negotiate A Lease Buyout?

What Is a Lease Buyout?

A car lease buyout is the price set by the dealership that allows you to purchase your vehicle during or after the expiration of your lease terms. The number a buyout is set at is usually defined by its residual value. A vehicle's residual value is the amount the car will be worth once your lease is over, which is determined by several factors:
Previous Sales For That Specific Make And Model: Previous sales usually help define a car's value and are generally separated by make and model.
The Current Demand For That Vehicle: If your specific model happens to be in high demand for whatever reason, that will increase the residual value.
The Current Conditions Of the Vehicle Market: If the new and used car market is elevated due to external factors like supply chain disruptions, that can increase the final value of the vehicle.
The Age Of the Car: A car's age can be an indicator of the condition a vehicle is in, and therefore has a significant effect on its residual value.
The Mileage of the Car: While age can help you determine the level of maintenance a car has received, its mileage can be an even more important factor. Older cars that have low mileage can often be in good condition, but higher mileage cars have almost always been the victim of significant wear and tear.
The Current Vehicle Condition: Whether a car is in Excellent, Good, Fair, or Poor condition can drastically affect its residual value.
The Car's Color: Some car colors, like silver, white, and black, often resell easier and at a higher price.
The Car's Brand: More reputable car brands hold their value longer and are easier to resell than lesser-known brands.

Once your residual value is determined, dealerships will factor in fees like a car purchase fee and any remaining payments you have to make on the lease. All these numbers will combine to give you your car lease buyout amount, which you can use to take full ownership of your vehicle. You can use GoodCar's residual value calculator to determine your car's value in advance.

How Does a Lease Buyout Work?

After your lease buyout amount has been determined, the process begins by talking with your dealership and negotiating payment. If your lease is still active, and you have time left in your terms, you'll likely have to compensate the dealership for the remaining monthly payments. This, in addition to the buyout amount, can make the cost rather exorbitant, which leads many to lease a vehicle to take out a loan. Lease buyout loans are usually offered by banks or other lenders and, depending on your terms, can be a very cost-effective way to take ownership of a leased car.

If the lease buyout amount is too high, you can also just turn the leased car in. You'll pay any small fees left over and be done; this does mean you'll be without a car, so you'll either need to start a new lease, find a new or used vehicle, or get another means of transportation. You can also trade in your lease for another vehicle if the lender offers that option; this may involve some trade-in fees, and if there is time left on your lease, you may also need to cover all remaining monthly payments. Alternatively, buying out the lease could be a viable option depending on your situation.

What Is the Process of Buying Out a Leased Car?

• Review the Lease Agreement: Start by checking your lease contract to determine the buyout price and any associated costs, such as early termination fees or outstanding payments.
• Contact the Dealership: Reach out to your dealership to confirm the buyout price and discuss the payment process. They may also provide financing options directly or guide you to potential lenders.
• Secure Financing: If paying in full isn’t an option, consider a lease buyout loan from a bank or credit union. Compare loan terms and interest rates to find the best deal that fits your budget.
• Make the Purchase: Once your financing is in place, you’ll need to finalize the paperwork with the dealership. They’ll transfer ownership of the car to you, and you’ll officially take ownership once the payment is complete.
• Pay Taxes and Fees: Depending on your location, you may also need to pay sales tax, title transfer fees, and registration fees. Ensure you budget for these additional costs.
   

How to Negotiate a Lease Buyout?

Unfortunately, most car lease buyout numbers cannot be negotiated. This is especially true at the end of a lease after all the paperwork has been signed and you've reached the conclusion of your terms. The only chance you have to negotiate your buyout would be at the beginning of your lease before your terms have been finalized.

Your dealership or leasing company will estimate the vehicle's residual value and put a number up for the buyout cost; this is rarely subject to change, and unless you go through a bank or credit union, that number isn't likely to budge. The only thing you can do is reject the terms completely and shop around, looking at other dealerships to see if they offer better buyout prices on that same vehicle. Overall, negotiating a car lease buyout is difficult or, in many cases, impossible. Lenders have little reason to lower a lease buyout price due to high vehicle demand and low profitability. If the vehicle has a set residual value, offering a lower buyout amount would only cost them money.

How To End a Car Lease Early?

Ending a car lease before the scheduled term is possible through several different approaches. Here’s a look at some of the options you can consider.

Buyout the Lease

One option you can consider to get out of a lease early is to attempt a lease buyout: this involves purchasing the vehicle and reselling it to another dealership or private party. Most dealerships will discuss lease buyout options during initial term negotiations, with some only offering a buyout once you have reached the end of your contract. This isn't always an immutable clause in your contract, though, and you may be able to discuss a mid-lease buyout later if you find yourself growing tired of your car. We recommend you check the current market price of your vehicle through our Vehicle History Report and compare it to the amount you still owe on the lease plus the buyout price. This will tell you how much you may lose or sometimes even gain from an early buyout.

Transfer the Lease

Another way to get out of a car lease you can't afford is to attempt a lease transfer. This involves moving ownership of the lease to another party, who then takes over responsibility for the vehicle and associated payments. Not all lenders will approve a lease transfer, so you'll need to discuss what circumstances have led to your current situation. Read through your lease agreement carefully to find any sections relating directly to transfers and see if you qualify. If you read the agreement but still aren't sure, contact your lender and discuss your options with them.

Negotiate With Dealership

Sometimes, the best way to get out of a car lease is to simply go talk with the dealership (or whatever entity you are leasing the vehicle through.) Talk with them about the issues you are having and see if you can come to a reasonable solution that works for all parties. It's possible you may be able to find a way to get out of the lease; if not, you can discuss whether they would be willing to lower your monthly payments or, even better, suspend them temporarily until your financial situation improves. While more manageable payments won't release you from your contract, it will relieve the stress a bit and give you time to figure out what to do long-term.

Trade the Leased Car

If the main issue you have is with the vehicle, not the payments, trading the car may be your best course of action. Some dealerships will offer vehicle trade-ins that utilize similar lease terms, allowing you to choose a car that meets your specific needs. It's possible you may have to pay a small fee, but often, this can be rolled into the monthly payments you'll make on the new leased vehicle.

Pay the Penalty

It's not the most attractive option, but one way to get out of a car lease is just to pay the early termination fee. Your contract will most likely include a set number for termination that will be paid upon the vehicle's return. Prepare yourself for a significant termination fee and the possibility of added costs due to changes in the vehicle's value. If the car has depreciated in value, you may end up paying more than you would by seeing your lease until the end.

Default on the Loan

The absolute worst option you can choose to get out of your lease is to default on your loan. Yes, this technically gets you out of your car lease, and one could argue it is the easiest way to do so. While defaulting is low effort initially, it will result in significant consequences later on. A default can destroy your credit score, making it incredibly difficult to rebuild. This will make getting loans near impossible in the future and may even lead to the repossession of personal property.