Buying Out a Lease: Everything You Need to Know

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Published On:
July 22, 2023

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Leasing a vehicle has become a popular option for many car enthusiasts, offering the flexibility of driving a new car without the long-term commitment of ownership. However, there comes a time when you may find yourself considering buying out your automobile lease. This decision comes with a range of benefits, from financial advantages to personal freedom. In this blog post, we will explore the advantages of buying out your lease, provide step-by-step instructions on how to do it using an auto loan, and share some key tips to keep in mind during the process.

Benefits of Buying Out Your Automobile Lease

  1. Financial Savings

Buying out your lease can save you money in the long run. Instead of making monthly lease payments, you can redirect that money towards building equity in the vehicle and eventually owning it outright. Additionally, you avoid potential mileage overage charges and wear-and-tear fees that may be incurred if you return the vehicle at the end of the lease term.

  1. Familiarity and Freedom

By purchasing your leased vehicle, you maintain the familiarity of driving a car you have grown accustomed to. You can also enjoy the freedom of customizing and modifying the vehicle to suit your preferences, without the restrictions imposed by a leasing agreement. Furthermore, you have the option to keep the vehicle for as long as you desire, without worrying about mileage limits or lease renewal negotiations.

  1. Resale Value

If you believe that the value of your leased vehicle is higher than the residual value stated in your lease agreement, buying it out allows you to capitalize on the potential resale value. You can either enjoy the vehicle for a few more years and sell it privately later on, or trade it in when purchasing your next car, potentially receiving a higher trade-in value.

How to Buy Out Your Automobile Lease with an Auto Loan

Step 1: Research Loan Options

Start by researching different loan options available to you. Compare interest rates, terms, and eligibility criteria to find the best auto loan that suits your financial situation. Here at Arbor, we have a long list of auto loan options to help you reach your specific goals and needs. Click here to learn more about our Auto loans.

Step 2: Obtain a Lease Buyout Package

Contact the leasing company or dealership to obtain a lease buyout package. This package will include the remaining balance on your lease, an odometer disclosure statement, and any applicable fees or taxes. Make sure to inquire about any potential incentives or discounts for early buyouts. This package may very based on the lease company. 

Step 3: Apply for an Auto Loan

Once you have done your research, submit your application for an auto loan. Provide all the necessary documentation, such as proof of income, identification, and credit history. The lender will evaluate your application and, if approved, provide you with a loan offer.

Step 4: Finalize the Buyout

Once you have received the loan offer, review the terms and conditions carefully. If everything meets your expectations, accept the offer and complete the necessary paperwork. The lender will issue a check for the payoff amount to the leasing company, finalizing the buyout.

Step 5: Enjoy your Car

Once the buyout is finalized the car is yours to enjoy! Remember to talk to your car insurance company and update any documentation to reflect that you now own the car.

Key Tips to Keep in Mind

Remember, buying out your automobile lease requires careful consideration and research. By following these tips and thoroughly understanding the terms and costs involved, you can make a well-informed decision and enjoy the benefits of owning your leased vehicle.

  • Evaluate the vehicle's condition and market value to ensure that buying out the lease makes financial sense.
  • Consider getting the vehicle inspected by a trusted mechanic before finalizing the buyout to identify any potential hidden issues.
  • Negotiate the buyout price, as some leasing companies may be willing to offer discounts or incentives to retain your business.
  • Be aware of any early termination fees or penalties associated with ending the lease early, and factor them into your decision-making process.
  • Consider the total cost of buying out your lease, including the remaining payments, taxes, fees, and any additional expenses such as registration and insurance. Ensure that the overall cost aligns with your budget and financial goals.
  • Make sure to explore all your financing options such as personal loans or refinancing. Compare interest rates and terms to find the most favorable option that best suits your financial situation. Our lending team can help you look at all the options to select the best one for you.
  • Understand the remaining warranty coverage and any maintenance obligations associated with the vehicle. Evaluate whether it aligns with your future plans for the car and if additional extended warranty options are available.
  • Request a vehicle history report to ensure that the leased vehicle has a clean title, no major accidents, and a consistent maintenance record. This information can help you make an informed decision about the vehicle's reliability and potential future costs.
  • Evaluate the timing of your lease buyout. If you are approaching the end of your lease term, it may be beneficial to wait until the lease maturity date to avoid early termination fees. On the other hand, if you anticipate the vehicle's value depreciating rapidly, buying it out earlier may be more advantageous.

Buying out your automobile lease can be a wise financial decision, offering long-term savings, familiarity with the vehicle, and the freedom to customize and keep it for as long as you desire. By following the step-by-step instructions and keeping these key tips in mind, you can successfully navigate the process of buying out your lease using an auto loan. Remember to carefully evaluate your options and talk with an auto loan specialist before making any final decisions.

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