contract being signed with a car key on top
Car Buying, Auto & Auto Buying

3 Reasons to Buyout Your Lease

If you’re one or two months out from your lease expiration, it’s time to consider whether to return it and walk away, lease a new car, or buyout your current lease. Not sure if buying the car is right for you? Here are three reasons it might be your best option:

1. You are way over your mileage

When you negotiated your lease, the dealer estimated what the car would be worth at the end of the contract—this is known as the residual value. That value was based on the number of miles you were expected to drive over the course of the contract—typically a range of 10,000 – 15,000 miles per year. If you have gone over this limit, your contract includes an overage charge for every mile—sometimes as high as $0.25 per mile. If you’re significantly over your limit, consider purchasing the car. At least this way you haven’t paid the dealer thousands of dollars only to be left still needing something else to drive.

2. Excessive Wear and Tear

If your leased car has noticeable dents, dings, and scuffs, mechanical issues, and/or a worn interior, you could end up paying high fees if you return it to the dealer in that condition. In this instance, it might be more economical to keep the car rather than pay high penalties and charges.

3. You’ve Done Everything Right

If you’ve kept your car in impeccable condition, maintained it appropriately, are close to your mileage max (but not over it), and you genuinely still love the vehicle, buying could be a great choice. Honestly, could you find a similar used car that you would be more confident in than the one you’ve already been driving around?

Bonus: if the dealer underestimated your residual value, you could score the car for less than it’s worth.

Things to Consider

There are instances when buying out your lease doesn’t make sense. These include:

  • If the car no longer matches your needs. Maybe in the time since you originally leased that two-door convertible, you had a few kids and now need a mini-van.
  • If it isn’t affordable. If you need a lower car payment, it’s probably best to turn in your leased car and look for a different option that better fits your budget.