If you really love your car, you may be considering how to buy your leased car so you can own it. Leasing a car comes with a variety of benefits, including lower monthly car payments. People often buy a leased car at the end of their lease term. In fact, sometimes dealerships prefer to sell you the leased vehicle to save them from restocking or if they have too much inventory.
Buying Your Leased Car
A lease buyout involves purchasing a leased vehicle either at the end of the contract or before the lease ends. Typically, leases include a purchase price option that was established when the lease was signed. If you are considering a lease buyout, do your homework first and understand how factors such as timing, the car’s value, and financing will impact the price you pay.
Determining Your Car’s Value
If you look at your monthly statement or log into your online account, it may list the payoff amount. The payoff or buyout amount includes the residual value of your vehicle, the total value of any remaining payments, and sometimes purchase fees. Additionally, you may need to consider wear and tear or mileage fees.
If you do not have a payoff amount, you need to calculate the residual value to get an accurate idea of how much the car is worth. In order to calculate this value, you’ll need a bit of information about the car. To calculate the residual, look up the original value of the car in your lease terms or in the Kelley Blue Book. After finding the original value, subtract the calculated depreciation value from this. This new result is the residual value of the car. Residual value is the price you will need to pay if you want to buy the car. It’s an estimate of what the car will be worth and it was made when you initiated your lease contract.
Once you learn the residual value, determine if the car is valued greater or less than the actual value. If the actual value is higher than the residual value, it may be a smart purchase. You may want to negotiate the purchase price or return the vehicle if the car is less.
If you are buying the car at the end of your lease or doing a Lease Buyout Loan, your residual value should be lower than the market value. For example, you discover that the residual value of your vehicle is $20,000 and the market value is $25,000. If you were to purchase the same car, you would have to pay $25,000 or you can save $5000 by purchasing your leased vehicle.
Is The Car In Good Condition?
You will want to consider the wear and tear of your car. Is it in good condition? Have you been driving from Waianae to Honolulu every day and the paint has some chips or have you only been doing small trips between Waipio and Ewa? Do you park your vehicle outside or in a garage? You will need to consider how worn out the vehicle is in regards to how it looks and the mechanics. Additionally, you should consider the mileage of the car. If you are over the agreed-upon amount, there will be a fee.
Overall, if there is a lot of damage or more mileage than you agreed to, it might be better to buy out the lease than deal with the penalties and fees associated dependent on the costs associated. If you are under, however, then you are in a good position to negotiate your buyout price.
Ready To Buy Your Leased Car?
If you think you want to buy out your car lease, you need to understand your options and how to determine which option is best for your particular situation. If you have questions, let us know or apply online now. Finally, it’s important to do your homework before deciding to buy out your leased vehicle.
It helps to understand how a car loan is calculated and how car payments work. Before you head to the dealership, please take a moment to decide what monthly car payment you can afford. First, you need to consider your budget. Most importantly, look at your situation and be realistic and honest. Car payments and the auto loan you receive should be affordable and doable.
If you need to borrow money, we can help you. If you’re still not sure whether a loan is a right option for you, call us at 808.73.PHFCU (737.4328) or visit one of our locations on Oahu (Waipio, Waianae, Ewa Beach, Honolulu, Airport, and Pearl Harbor). Our team is ready to look at your financial situation and recommend the best option for you. You can also apply online to get started…
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