Have you ever purchased the car you leased? Do you know how to buyout your leased car? Will you drop the car off with the dealer and sign for a new car? Or you’ll just end up stay attached to your “rented” car since you love the car you’re leasing? If so, consider buying it when the lease ends.
Leasing companies are happy to sell you the car for its residual value. But before you sign that commitment, there’s some homework you may do first to see if it’s financially worthwhile. Below are some tips which will help you decide if you should take over your lease.
How Much Is It?
Check your lease contract for “purchase-option price”, also called the buyout amount.
Once you know the residual amount of your car, you would also like to understand the market price of the car. You can determine your car’s value by searching online, at like CarPrice.com. Unless your leased car was extremely popular, usually its residual value is above the market price. But if f your buyout amount is less than the market price, buying your car could indeed be a solid deal.
What’s your Budget?
If you purchase out your lease and do not make a deposit, your monthly payments will likely be higher than your lease payment.
Let’s see a Toyota Collora as an example:
A customer started this lease a couple of years ago, he made a deposit of $2,000 for the car. His monthly payment was $200 plus tax, for 48 months. This lease had a residual of $10,000.
The customer decides to buy the vehicle after the lease term ended and takes a 60-month loan to pay the remaining balance. The new monthly payment has go up to $250, assume an rate of interest of 6%. If he opted to increase the loan to 72 months with an equivalent rate of interest, her payment would drop to $225. This calculation doesn’t involve taxes, which will make the monthly payment higher.
You’ll see it’s better to understand the difference before you decide to finance your leased car.
How to buy the Car?
If you’ve decided to buyout your lease car, you’ve got two ways to choose: with or without a dealership’s participation.
If you are not financing the vehicle or you’re financing the loan with a financial institution, you send the check to the lender for the payoff amount. Then go to your Department of automobiles to pay the taxes and registration fees.
Is the Car in Good Mechanical Condition?
One of the good things about leasing is that you’re usually under warranty for the duration of the lease. But once you take over your lease, be aware that most bumper-to-bumper warranties end at the three-year mark.
Consider having your vehicle verified for mechanical problems before you purchase it. If you are still covered by the factory warranty, you’ll arrange for repair of covered items at little or no cost.
Keep in mind if you haven’t had to exchange tires, brakes or your battery during your lease, you’ll got to do so at some point in your ownership. Take those normal maintenance costs into your consideration.
But if your vehicle is in good overall condition and won’t cost that much to stay up, that’s another sign that your leased car could be a good buy.
Ending the Lease term
Have You Exceeded Your Miles or Bashed the Car’s Interior or Exterior?
If you’ve gone over your lease’s mileage limits, buying the car becomes a way better option. Same goes for excess wear and tear.
Since when you complete a lease buyout, you’ll not be penalized for going over your allowed mileage or having a dent in your fender. Think about those penalties when you’re deciding whether buying your lease is the right move.
After all, the car is already in your driveway and you have driven it for years. you know the best if it is a car you would like to continue driving. Now all you’ve got to do is catch on at the best price you’ll.
Learn more about the benefits of buying from Carnex. We believe that all clients deserve to know the good and bad of what they’re buying. Because we wanted to know these when we bought cars. That’s why at Carnex.ca, we will proudly display every detail every step of the way. Browse all the best cars, automobile buying tips, auto insurance, young drivers, driving techniques, auto industry trends from Carnex Blog.