What To Do if You Want To Buy Your Leased Car
You typically get the option to buy your leased car. Whether you should do that, however, depends on a variety of factors.
April 15 2022, Published 6:03 a.m. ET
Many people want to know whether it’s a good idea to buy a car they've leased. The simple answer is that it depends: there are several factors to consider.
People choose to lease a car instead of buying for a number of reasons. Leasing may appeal to you if you want to drive a new car every year, or if you want to make lower monthly payments for your car. The average difference between monthly payments on a lease and an auto loan can be as high as $150.
Should I buy my leased car and then sell it?
Car lease contracts typically contain a buyout option, with a set buyout price. That price is what the leasing company estimates the car would be worth at the end of the lease period, which is typically two to three years.
You may have the option to purchase the vehicle at the end of the lease or before. If the buyout price is lower than the car’s current market value, it would make sense to exercise the buyout option since you’d be getting a discount, and you could turn around and sell the car for a profit. A global chip shortage has impacted automakers and pushed up used car prices, opening an opportunity for people to sell their leased cars at a profit.
Before you jump on that profit opportunity, though, bear in mind that you’d have to pay a sales tax if you buy your leased car. This figure should be considered in your decision.
When you should buy your leased car
Some drivers forgo the buyout option at the end of the lease because it doesn’t make sense, such as when the buyout price is higher than the car’s market value. In other cases, the driver just doesn't like the car, but in these cases, if the buyout price is favorable, it would be best to just buy the vehicle and sell it for a profit.
When you lease a car, there's also the mileage limit to consider. If you exceed that, you’ll face a face mileage penalty when you return the car. Additionally, lease contracts contain potentially expensive wear-and-tear fees. If the car is heavily damaged, it makes sense to buy it instead of returning it.
What to do if you want to buy your leased car
You'll often get a better deal in a lease buyout if you let the leasing company express interest first. The company will typically call you a few months before the lease expires to find out if you’d like to keep the car.