Leasing vs. Buying a Car: Should You Lease a Car or Get a Loan?
A car is likely one of the most expensive acquisitions you will ever make. Luckily, there are different ways to get you behind the wheel...
A lease buyout loan is financing that lets you buy the vehicle you’ve been leasing instead of returning it when the current lease ends. This could be a good option if you want to keep your vehicle or sell it later for a profit.
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:
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:
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.
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:
Before you get a lease buyout loan, here are a few things you should consider:
There are also a few drawbacks to buying out a car lease, including:
Before getting a lease buyout loan, consider the pros and cons.
A lease buyout loan might be a good option if you:
When shopping around for a lease buyout loan, keep an eye out for eligibility requirements. This typically includes:
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:
|Lender*||APR (Fixed)||Loan Term||Recommended Minimum Credit Score|
|Gravity Lending||5.04% to 20%||12 to 84 months||680|
|LendingTree||1% to 35.99%||12 to 84 months||500|
|myAutoloan||Starting at 4.49%||24 to 70 months||575|
|RateGenius||2.99% to 21%||35 to 72 months||500|
|Tresl||1.5% to 17.99%||36 to 84 months||580|
*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.