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Few drivers want to lease forever. Whether you’re in the middle of a lease itching to get out or near the near the end, you should know what it costs to exit a lease. Ending your lease early (before it expires) can attract costly penalties. And if you want to buy out your lease to keep the car, that comes with it’s own costs.
How can you avoid lease buyout fees? Some fees are non-negotiatble, but others you can avoid. Here's what you need to know.
Lease buyout fees are the costs the leasing company or dealership charges for exiting your lease agreement through a buyout. These are different from general leasing fees like monthly payments, excess mileage charges and wear-and-tear fees. There’s also a disposition fee if you return the car instead of buying it, covering the lessor's cost to clean, inspect and resell the vehicle.
What are the lease fees exclusive to a buyout? Fees usually vary between providers and depend on whether you're buying out at the end of the lease or before it expires. You’ll typically face fewer fees if buying out a car as the lease ends, and these fees may include:
If you buy out the lease before it ends, the provider may also charge an early termination fee or require you to cover the remaining payments. Avoid unexpected fees by checking your lease agreement carefully and asking the lessor to clarify any unclear terms.
The cost of getting out of a lease significantly depends on the vehicle dealer and how you end the lease.
Waiting until your lease ends and not renewing is usually the cheapest option because you don’t have to pay early termination fees. You’ll pay the disposition fee (usually $300-$400) and any penalties (e.g. excess mileage or wear and tear).
Canceling the lease early becomes much more expensive. The largest cost is usually the early termination fee, which can be a lump sum specified in the lease agreement. Alternatively, the dealer may calculate it based on your remaining lease payments. In this scenario, the earlier you terminate the lease, the higher your termination fee will be.
For example, if you cancel a two-year lease after one year and your monthly payment is $500, you may have to pay for the remaining 12 months, which adds up to $6,000.
Finally, buying out your lease includes paying the residual value of your car to keep it. Many drivers cover this cost and other lease buyout fees by securing a lease buyout loan.
Lease-ending fees and costs specified in the contract are typically not negotiable, but there’s still some wiggle room for lowering your expenses if you’re planning to purchase the car. Try these tips for reducing lease buyout fees:
The earlier you end your lease agreement, the more it’ll cost you. Completely avoid early termination fees and reduce the chances of paying extra charges by buying out your lease only when the agreement expires.
If you wait until the lease ends, you only need to pay for the car’s residual value stated in the agreement and some smaller fees, including sales tax. The closer you are to the lease’s end, the smaller your early termination fees and other costs should be.
Residual value is the estimated worth of the car at the end of the lease, and the amount you must pay to buy it. Lease agreements typically specify the amount, and it’s usually not negotiable.
While the residual value in the agreement doesn’t change, your car’s market value might. Buying out a leased car when its market value exceeds the residual value could save you money or even let you buy and sell it for a profit. Monitor your leased car’s value with tools like Kelley Blue Book (KBB) to determine if you’re in a favorable position for a buyout.
Most lease agreements label certain terms as “non-negotiable,” but it never hurts to try. While the residual value and early termination fee might be fixed, you can often negotiate other lease buyout fees. For instance, you can ask the lease provider to reduce or waive fees like documentation, inspection or title and registration charges.
The purchase option fee is one particular cost most dealerships may be willing to drop. You can also ask for purchase incentives and discounted financing to lower your overall buyout cost and make the deal more affordable.
If you love your leased car and a buyout makes financial sense, it may still be too pricey to pay out of pocket. You can lower the costs by waiting until the lease ends and negotiating the fees to minimize your expenses, but you still might need a loan to cover the buyout.
At RefiJet, we can quickly connect you with lenders willing to cover your lease buyout fees and other costs. Use our quote tool to find competitive rates for your lease buyout or auto loan refinancing.
Here are answers to popular questions about lease buyout fees and costs:
The cost of getting out of a car lease depends on when you end it. It’s usually cheaper to let the lease expire and much more expensive if you end it early. Ending a lease prematurely costs more because of the early termination charges, the remaining lease payments and other fees.
Yes, you may be able to negotiate lease buyout fees like documentation, inspection and title or registration fees to reduce your expenses. However, you typically can’t negotiate costs like the residual value and sales tax.
Dealers charge a disposition fee only if you return the car rather than buy it at the end of your lease. It covers the cost of cleaning, inspecting and preparing the car for resale.
You can avoid extra lease buyout fees by waiting until the lease ends before buying the car. You could negotiate with the dealer to waive or reduce certain fees or finance the buyout through a lender that offers incentives or fee coverage.
Yes, dealers typically include sales tax as part of the buyout costs when you purchase a leased car.
The residual value is a fixed price set for buying the car at the end of your lease. It’s specified in the agreement and is non-negotiable. In contrast, the buyout amount is the total amount you pay to own a leased car. It includes the residual value plus any fees and taxes.
From disposition fees to taxes, see what lease buyout fees you might face and how to avoid paying more than you should.
