What Is the Payoff for a Leased Car?

by Shanan Miller ; Updated July 27, 2017

The purchase price for a leased vehicle changes throughout the contract term. If you purchase the car before the end of the lease term, you'll pay more than the purchase amount, also known as the residual value, which is stated in your contract. Expect to also pay fees comparable to those of a first-time purchase, such as tax and motor vehicle fees.

Residual Value

If you wait until the end of your contract, you'll pay the lease's residual value to purchase the car from the leasing bank. The residual value was determined at the time you initiated your lease. The leasing bank guessed the future wholesale value of the vehicle, which may be incorrect. Try to negotiate a lower purchase price that's inline with current resale values. Check the current value of your leased vehicle at Edmunds.com or the Kelley Blue website to determine if the bank guessed the car's future value incorrectly, and if so, negotiate accordingly.

Early Purchase

If you want to purchase your leased vehicle before the end of your contract, expect to pay your remaining payments in addition to the buyout amount stated in your contract. Call your bank at anytime to determine the car's present purchase price. If you plan to purchase the vehicle from a dealer, call your leasing bank to obtain the buyout price ahead of time. Some leasing banks allow dealers to increase the buyout amount to make a profit.

Repossession

If your leased vehicle was repossessed, your loan payoff amount likely includes late fees, penalty charges and repossession fees if the vehicle was seized rather than returned. When you lease a vehicle, the leasing bank pays the dealership for the car's total purchase price. If you default on the loan, expect to pay for the entire cost of the car, not just the lease amount. If you don't pay to retrieve your vehicle after the repossession, your bank will sell the car. If the sales price doesn't satisfy the total cost of the car, you must pay the remaining balance.

Additional Fees

Whether you purchase your vehicle early or wait until the end of your contract, you'll pay additional fees, as if you were purchasing a used car for the first time. You don't own your car during the lease. When you purchase the car, you'll pay your state's applicable taxes and motor vehicle fees. Ask your leasing bank or a dealership which fees you'll pay in addition to the buyout amount so you can budget accordingly. Depending on the tax rate of your town and the purchase price of your vehicle, you may pay thousands more than you expected.

About the Author

Shanan Miller covers automotive and insurance topics for various websites, blogs and dealerships. She has extensive automotive experience, including auction, insurance, finance, service and management positions. Miller has worked for dealer sales events around the United States and now stays local as a sales and leasing consultant for a dealership.