Top Lease Buyout Loans

Generally, your leasing company will contact you a few months before your lease is up. If you want to keep your vehicle at the end of the lease, you have a few options. You can either:

• Return the vehicle as agreed
• Extend your current lease
• Sign up for a new lease
• Return the vehicle to the dealership

You’ll need to check your vehicle’s paperwork to see if a lease buyout is an option for you. If it is, and you still want to purchase your car, you have one of two options:

• Buy the car with cash
• Apply for a lease buyout loan

You can get a lease buyout loan from online lenders, credit unions, banks, and other finance companies. Be sure to compare different lenders to find the best offer for you.

After you apply and are approved for a loan, you’ll be able to pay off the current lease. You’ll then need to start making payments on the new loan until it’s paid in full.

Like most auto loans, lease buyout loans come with their own terms, rates, requirements, and restrictions. Typically, the loan amount will be based on the vehicle’s residual or predicted value at the end of the current lease term. This could result in a higher buyout price than the vehicle’s current market value.

Can You Buyout Your Lease Before It’s Over?

Most lease agreements have a buyout option that lets you buy the car at the end of the lease term or even earlier. In case you choose to buy out the lease early, you will be liable to pay the remaining lease payments and fees, along with the residual value of the car.

Here are the basic steps to getting a lease buyout loan:

1. Review your documents: Before your leasing company contacts you, read through your current leasing agreement. It will include your vehicle’s residual value — that is, the estimated value of the vehicle when your lease expires.
2. Make sure a lease buyout is an option: Your leasing agreement should also indicate whether you can buyout your car. If you can, inform your leasing company that you intend to use a loan to purchase the vehicle.
3. Check your vehicle’s current market value: The market value might be different from the residual value. If it is, you might be able to use this to negotiate down your car’s purchase price. Check with places like Edmunds or Kelley Blue Book for an estimate of your car’s value.
4. Compare lease buyout loan offers: Shop for different lenders to see if they offer this type of financing — and at what rates and terms.
5. Apply for a loan: Complete the loan application and provide any required documents. This might include your driver’s license, credit statement, and auto insurance card. It may also include information about the vehicle, such as its residual value, current mileage, year, make, model, and Vehicle Identification Number (VIN).
6. Sign the loan offer: If possible, negotiate for a better deal with the leasing company. Once you’ve agreed upon the terms, sign the paperwork or contract.

Before you get a lease buyout loan, here are a few things you should consider:

• Monthly payments: A lease buyout loan might come with higher monthly payments than the original lease. This is especially true if the interest rate is higher, or if the vehicle’s value has increased.
• Cost-effectiveness: Owning a vehicle outright can be more cost-effective than leasing one out. But you will need to keep the same car for a while to make it worthwhile.
• Wear and tear limitations: Many automobile leases have additional fees for excessive damages or wear and tear. If your vehicle falls in this category, it might be worth purchasing it to avoid these charges.
• Excess miles: Some lease contracts have a maximum annual mileage limit. If your leased vehicle exceeds that limit, you might end up having to pay for the extra mileage. With a buyout loan, you can avoid this expense.
• Negotiable price: You may be able to negotiate the lease buyout for a better deal. This could potentially save you money.
• Building credit: As long as you make on-time payments on your loan, you could use it to improve your credit over time.

There are also a few drawbacks to buying out a car lease, including:

• Vehicle depreciation: When you purchase a vehicle after the lease ends, you’ll have to pay the remaining amount. The vehicle will also be considered “used” and may have decreased value. This means you might not get as much from it if you sell it later.
• Additional costs or fees: A lease buyout loan comes with certain fees, such as interest charges. You may also need to pay a penalty for ending your lease agreement early. Calculate the potential costs and savings of a buyout to see if it’s a good idea.

Before getting a lease buyout loan, consider the pros and cons.

Lease Buyout Loans Pros

• Could save you money in the long run
• Get to keep your current vehicle
• Can help you avoid charges for things like excess wear and tear
• On-time payments could help you build credit

Lease Buyout Loans Cons

• The vehicle’s value will likely decrease
• You won’t be able to easily exchange your current vehicle when the lease runs out
• More commitment to your current car
• Not all leasing agreements allow for lease buyout loans

A lease buyout loan might be a good option if you:

• Like your vehicle and plan to keep it for the foreseeable future
• Can negotiate a good deal on your car’s predicted residual value
• Would have to pay other fees — like excess mileage or wear and tear — otherwise
• No longer need the flexibility of switching out vehicles and want to save money in the long run

When shopping around for a lease buyout loan, keep an eye out for eligibility requirements. This typically includes:

• Valid driver’s license and auto insurance card
• Steady income showing you can afford monthly payments
• Fair credit or better (580+)

The annual percentage rate (APR) on a lease buyout loan tends to be higher than the lease itself. However, the exact rate depends on a few factors, including your credit score. Typically, the better your credit score, the lower your interest rate will be.

Here are a few examples:

*Rates and requirements are subject to change

In conclusion, a lease buyout loan can be a good option if you want to keep your leased vehicle or sell it later for a profit. These loans allow you to buy your car instead of returning it when your lease ends. However, before getting a lease buyout loan, it is essential to consider the pros and cons, as well as the cost-effectiveness, wear and tear limitations, excess mileage, and negotiable price. Make sure to review your documents, check your vehicle’s current market value, compare different lenders, and apply for a loan. Remember that lease buyout loans come with their own terms, rates, requirements, and restrictions, and the loan amount will be based on the vehicle’s residual or predicted value at the end of the current lease term. Overall, a lease buyout loan can be a great option for those who plan to keep their car for the foreseeable future, negotiate a good deal, or want to avoid paying additional fees.