You can expect the leasing company to reach out to discuss your options about three months before your lease ends. But if you initiate the process and contact them before that, you give yourself more time to get your research done and paperwork in order. The lessor’s contact information is on your original contract as well as your digital or paper monthly statements. Follow these steps to begin your decision-making process:
Check your paperwork. Look through your leasing contract to find the buyout price. According to TrueCar, an online automotive marketplace and CR partner, almost all leases have a buyout clause that allows the consumer to buy the car. The rate of depreciation on each car is precalculated and baked into the contract, so the leasing company can’t change the buyout price based on current market conditions.
Research your vehicle’s value. Get an estimate of what your vehicle is worth as you approach the end of your lease and compare it with the end-of-term value stated in your lease contract. You can get an estimate of what it’s worth in minutes on websites including Carvana and CarMax, for example, or you can go to an online marketplace such as Autotrader or Kelley Blue Book and check what dealers and private parties are asking for your car with the same model year, similar miles, and the same options.
Do the math. There are a number of costs that you will have to take into consideration:
• If you can’t pay for the car with cash, check with your bank or credit union on the total cost of a used-car loan. The current lessor may also offer you a competitive rate.
• Visit your state’s department of motor vehicles website to determine registration costs, including any sales taxes you will owe.
• Check with your insurance company to see if your payment will change.
• Consider any additional fees, such as a title transfer fee, which is paid to transfer the title to you, the new owner.
Contact the lessor. This final check lets you confirm the buyout price with the leasing company. Make sure to ask if there are any additional fees involved or, if you’re buying it before the lease ends, an early termination charge.
