Lease Buyout 101
The best used car just might be the one you’re now leasing!
Why? Because you already know your vehicle, its history and maintenance, and best of all, you’ve already paid for the bulk of depreciation through the lease. It just might make sense to consider purchasing your leased car once it comes off lease – and you might even be able to lower your monthly payment even more!
Let’s Recap Market Changes From Three Short Years Ago
Here’s why it might shock you when you go back to the dealer to lease a new car and see how much higher your monthly payment will be:
- Interest rates are higher. Your lease has a “money factor” which is what you pay for “borrowing” the money in the lease. Today, that money factor will be higher than three years ago – and that alone could add $100 or more to your new monthly lease payment.
- New vehicle prices have increased. Higher priced vehicles mean higher lease payments usually. Some people try to extend out the term longer than you want the vehicle just to afford the payment, but this is never a good idea.
- Lease end vehicle values are likely lower. Many manufacturers are reducing leasing in their portfolios – and one way to do that is to lower the lease end vehicle values so leasing is less attractive to consumers. That also drives up the monthly payment in a lease; you’ll be paying more to amortize the lease each month.
Consider Purchasing Your Leased Vehicle
Although it’s a used car, it’s still relatively new and likely has low miles. You’ve driven it and you know how good it still is (assuming that’s the case). And you’ve probably have done all the required maintenance.
But here’s the best part – it’s likely relatively cheap to buy versus a similar new car, often by about half! Think about that for a second. Where else can you purchase a car you know well – and one that’s nearly the same as a new vehicle – for half price? You can’t – other than your leased vehicle!
How to Buy Your Leased Vehicle
Every consumer vehicle lease in the USA is considered a “closed end” lease. That means you have the option to do one of two things at lease end: 1) return your vehicle to the Lessor; or 2) purchase your vehicle at the stated value in the lease.
If you want to purchase the vehicle at lease end, simply contact your Lessor and tell them so. FiWize has a great financing solution that can help you make the purchase, and we might even be able to lower your monthly payment from your lease! Plus we’ll handle the paperwork and work with your Lessor to make it super easy.