As your car lease comes close to its final days, you may be thinking about your next steps. If you’re interested in buying or leasing a different vehicle, you may wonder which car dealers will buy out your current lease. Before seeing about having a dealership buy out your lease, you need to know whether it’s an option, who will buy your lease, and how much, if anything, you’ll save by taking this route. Typically, the dealership where you leased the vehicle is the place to start. However, you do have other options.
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When you know your options, such as buying out your lease or searching for a car dealer who wants to buy it, you have a better chance of getting a good deal. If you can find a dealership that’s willing to pay you for your lease buyout, it may be a good move. Of course, before you make any changes to your financial situation, you should always look at the numbers to make sure it’s something that will benefit you and your bank account.
Factors that will affect your lease buyout include the type of car you drive and how well you’ve taken care of it. A car dealership will be more willing to buy out a lease on a car that’s in good shape and has low miles compared to one that has not been maintained properly and has high mileage.
Which Car Dealers Will Buy Out Your Lease?
Depending on the value of your vehicle, you may be able to get a car dealer to buy out your lease. As long as your lending company allows it, just about any car dealership could buy your lease if it’s a good bargain for them. Because car dealerships are in business to make money, they’ll be willing to work with you on a lease buyout if they benefit from the deal.
The dealership where you got your vehicle isn’t the leaseholder, as it’s typically a bank that holds the lease. So, you don’t necessarily have to do a lease buyout with the dealership where you got your car, but just make sure your lending company allows third-party lease buyouts.
For example, let’s say you’re close to the end of your lease, so you go shopping for a new car just to see what’s available. While you’re out, you find the perfect vehicle. You talk to the dealer and let them know your lease is almost up, but you want a car they have on the lot. This can be very enticing for a dealer, as they’ll sell you a car and get another car to sell down the road. If your lease buyout costs them less than they’ll make selling you the car, they’re going to make you an offer.
The dealer can work with your lease provider to buy out your lease so that you can drive home in the new vehicle the same day. This will get you out of your lease and into a new car without much hassle.
Can You Trade In Your Leased Car?
A lease buyout isn’t the same thing as trading in your vehicle. If you lease a car, you technically don’t own it: the leasing company does. This makes it tricky to trade in a leased car. However, it’s not impossible.
The main reason why it’s difficult to trade in a leased car is that leased vehicles rarely have equity (when your car is worth more than the amount remaining on your lease). So, if you do have equity in your leased car, you may be able to trade it in for something new.
At the end of your lease, you’ll probably have the option for a lease buyout, where you can pay the residual value (an estimate of the car’s value at the end of the lease term), plus any taxes and fees, and become the owner. However, if you don’t want to keep it, you can get another car with a new lease agreement. This is similar to trading in your vehicle, as you get something new to drive with fewer miles and less wear and tear.
If you want to stop leasing early and trade in your car to purchase a brand-new or used vehicle, you need to have equity in your lease. When you trade in your vehicle, you use its value as a down payment so you don’t have to finance as much of the new car’s cost.
If your leased car has negative equity, meaning that you owe more than the vehicle’s current value, a dealership won’t have any reason to take it. It’ll only take a trade-in if it can make money by selling the vehicle or leasing it to someone else later.
Does a Leased Car Have Equity?
Lease estimators are good at what they do, so the residual value in your lease is generally close to the amount that your car is worth at the time of a lease buyout. However, if the price of used cars increases (as it has recently), it’s more likely that your leased vehicle will have equity. For example, if you leased your vehicle in 2019 for three years, you probably had equity when your lease was up, due to the large increase in used-car prices in 2020 and 2021.
The residual value is the amount that the leasing company estimates your car will be worth at the end of the lease. If you opt to do a lease buyout and keep the car, you will pay the residual value plus the remainder of your payments and any taxes and fees. In some cases, you may also have to pay a termination fee if you buy out the lease before the end of the term. If the value of your car is higher than the lease payoff amount, you have equity in your leased vehicle.
Having equity gives you leverage when the time comes to end your lease since you can take it to any dealership and ask them to buy it out. You’ll be able to use the equity you have toward the purchase price of a new vehicle, or, if you’re leasing, you can use it for the upfront fees.
Will a Bank Finance a Lease Buyout?
Many banks and leasing companies will provide you with a lease buyout loan. So, if you decide you want to keep your car instead of returning it or having the dealership buy it out, talk to a lender about getting a loan for the amount you owe. By planning ahead, you can get preapproved for a lease buyout loan so you’re ready to negotiate on the day your lease ends.
You’ll need to know the residual value of the vehicle and compare it to its actual cash value. If the two are nearly equal or the car’s actual value is greater, you should have no problem getting a loan. Banks may consider other factors such as your payment history and credit score, but the actual car will serve as a guarantee on the loan, so its value may be more important to their decision-making process.
Tips for Buying Out a Lease
Use these tips if your lease is ending and you want to buy out your lease yourself or if you want a car dealer to buy out your lease so you can get a new car:
Consider Timing
The time of year will affect whether you can get a dealership to buy out your lease. Car sales have highs and lows at certain times of the year and during certain times of the month, so choosing the best timing can give you a better chance of selling your lease to a dealer. It’s a good idea to start planning early to have a dealership buy out your lease, even if you ultimately decide to buy it out yourself. Owners of popular models may have a better chance of making a lease buyout deal with a dealership.
Know the Car’s Value
Before you try to negotiate a lease buyout with a dealer, know your car’s value. Knowing how much your car is worth and its residual value gives you an idea of what you can get for it. For example, if the lease buyout amount is $19,000 but the car is only worth $15,000, your car has negative equity of $4,000. This doesn’t give you any room to negotiate.
On the other hand, a lease buyout of $14,000 for a car that’s worth $16,000 would result in positive equity of $2,000. Once the dealership buys out the leased car and pays off your lending company, you could use the leftover money as a down payment on another car.
Apply for a Loan to Keep the Car
Maybe you want to keep the car instead of letting the dealership buy it out. In this case, you should apply for a loan and get preapproval before your lease ends. Applying early for a lease buyout loan gives you time to fix your credit or adjust your budget, if necessary, to get a better rate or to qualify for the terms you need. Preapproval can also make the buyout process go more smoothly and quickly, even if you go to another dealership.
Negotiate the Deal
Whether you have a car dealership buy out your lease or decide to buy it out yourself, you can try to negotiate the deal. If you have some equity in the car and know its current value, you’ll have more bargaining power during the negotiations.
Finance & Insurance Editor
Ashley Donohoe has written professionally about business and finance since 2010 and has served as an expert reviewer since 2017. Her work has appeared on major websites such as Money.com, The Balance, and the Miami Herald. Having run her own business, she has broad expertise in taxation, financial management, accounting, and investments. Her educational background includes a B.S. in Multidisciplinary Studies, Master of Business Administration, and certifications in accounting and taxation.
