You have been leasing your car for some time and are coming to the end of your lease term. Your mind is on what to do next, including whether to buy or lease your next vehicle. If you like your current car, you can keep it after the lease expires. Most leases include a “buy option,” one that allows you to purchase your leased car.
1. Review your paperwork. When you leased your car, you were given several pages of paperwork including a car lease agreement. That agreement spells out the terms of your lease and provides instructions on returning your car at the end of the lease term. It will also give you a dollar figure for what the car can be purchased for at the end of the lease term.
2. Get in touch with your dealer. Call the dealer where you leased your car and ask for the buy out price of the car. That price may differ from your lease agreement. If it comes in lower, you can take that amount or you may be able to negotiate a lower price. You can find out the current value of the car by visiting Kelley Blue Book and clicking on the link for “What Is My Car Worth?”. If the price comes in lower, use this information to negotiate a lower buy out price.
3. Arrange your financing. If you have cash to buy your leased car, then present a personal check to your dealer for the full amount. If you do not have cash, you can arrange financing to cover your loan. Your bank or credit union, or some other financing company, may extend a loan to you. Tarry Shebesta, president of Automobile Consumer Services Corp. recommends that you contact the bank that financed your lease and ask them for the buy out amount. He also recommends that you “get the phone number of the person in charge of making the decision” and explain that you would consider financing with them. Shebasta explains to Edmunds readers to make an offer and see if it is an amount that your lender can live with.
4. Make an appointment with your dealer. When your financing has been arranged and you have a check in hand, drive your vehicle to the dealer and complete your paperwork. If you are paying cash, you’ll give your dealer a personal check. If you are financing your vehicle, your lender will supply a business check to you.
5. Visit DMV. Once you have finalized your transaction, visit your department of motor vehicles and register your car. You will obtain updated registration and fresh tags. If you bought the car with your money, a title will be sent to your address. If you took out a loan to buy your car, the title will be sent to your lender who will hold a lien on it. Contact your insurance company and explain that you are keeping your leased vehicle. Update your insurance to reflect your current coverage needs.
If you want to buy out your lease before the end of the lease term, that may not be a good idea advises Dr. Don Taylor writing for Bankrate.com. Consumers can find themselves upside down with a leased car, owing more on it than it is worth. Instead Taylor advises that you should wait until the end of the lease to exercise your buy option.