Lowering the lease buyout amount on your car can save you money. You may be happy with the car that you've been leasing and know that it's mechanically sound, so you would like to buy it when given the option. However, negotiating with the dealership or leasing company when your lease expires takes skill and knowledge. Before you approach the subject of buying the vehicle that you've been driving, you need to understand the terms of your lease and know valuable details about your car.
Read your lease carefully to understand the terms of your buyout. Look for the residual value, which is how much your car is estimated to be worth at the end of the lease, and any fees associated with the purchase. If you return the vehicle and don't buy it, you may owe the leasing company money if the residual value is higher than the market value.
Check your odometer to determine if you have exceeded the mileage limit specified in your lease. Driving more miles than allowed on the lease increases the buyout amount. If you are in this situation, do not divulge your mileage during negotiations with the leasing company, because it can compromise your position to negotiate.
Check your car's current market value on a reputable website that allows you to enter the make, model, year, options and mileage. You will use the value to compare it to the buyout amount once you receive it.
Wait to contact your leasing company. You can call them for the buyout amount a few months before your lease expires, but knowing that you are eager to buy your car risks your posture during negotiations. If you are patient, the company may give you a buyout offer close to the date of expiration.
Research loans from various lenders once you know the buyout amount. You can save money by financing your buyout with a company other than the dealership or current lease holder. In addition, use the information as a bargaining tool when negotiating the terms of your buyout. However, many lease buyout loans carry higher interest rates than a standard car loan.
Offer or counteroffer the lease holder an amount less -- as much as 25 percent -- than the residual value of the car, depending on whether you contact the company first or the other way around. If you return the vehicle, the car dealer will not be able to sell it on the lot for a high residual value or, possibly, even market value, because it was leased. Therefore, it saves the dealership time and money if you buy out the lease.
Counteroffer at 15 to 20 percent less than the residual value if the leasing company does not accept your first offer, and it is less than a month from the expiration of your lease. Explain that, once the car is returned, the lease holder may not be able to earn as much as you are offering if it is sold at wholesale or auction.
Decide if it's cheaper to buy the car for the leasing company's final offer just before your lease expires or to purchase another similar vehicle. Ideally, you will not have to pay full residual value after negotiating the buyout amount.
- CarsDirect: Getting Lease Buyout Car Loans with Low Rates
- Bankrate.com; The Lowdown on Buying Your Leased Car; Lucy Lazarony; 2004
- LifeTips: Lease Buyout Tips
- Loan.com: Subscribe to news about Car Loans How to Negotiate a Lease Buyout
- Consumer Financial Protection Bureau. "What Should I Know About the Differences Between Leasing and Buying a Vehicle?" Accessed April 12, 2020.
- Merriam-Webster. "Lease." Accessed April 12, 2020.
- AARP. "To Buy or Not To Buy." Accessed April 12, 2020.
- Consumer Financial Protection Bureau. "What is a Manufacturer Suggested Retail Price (MSRP)?" Accessed April 12, 2020.
- LeaseGuide.com. "Capitalized Cost – Cap Cost." Accessed April 12, 2020.
- Autotrader. "Leasing a Car: Can You Negotiate the Price?" Accessed April 12, 2020.
- Edmunds. "The 'Residual Value' of Leasing." Accessed April 12, 2020.
- Federal Reserve. "Keys to Vehicle Leasing: Future Value." Accessed April 12, 2020.
- LeaseGuide.com. "Money Factor—Explained." Accessed April 12, 2020.
- Federal Trade Commission. "Financing or Leasing a Car." April 12, 2020.
- Federal Reserve. "Keys to Vehicle Leasing: End-of-Lease Costs: Closed-End Leases." Accessed April 12, 2020.
Carol Deeb has been an editor and writer since 1988. Her work has appeared in magazines, newspapers and online publications, as well as a book on education. Deeb is a real-estate investor and business owner with professional experience in human resources. She holds a Bachelor of Arts in English from San Diego State University.