Buying Out Your Car Lease Before It Ends

When you find the perfect car, you want to own it and make memories with it. If your perfect car is currently your leased car, you may be wondering: can you buy out a lease early? The good news is you likely can buy out your lease whenever. 

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However, buying a leased car can be far more expensive if you pull the trigger before the end of the leasing term. In this guide, we’ll share how to time your lease buyout to save money, get the best return on investment and avoid regrets.

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Key takeaways

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• You can buy out a lease early, but it costs more than a normal lease buyout due to early termination fees and other charges.
• Some lessors require you to pay the remaining monthly payments. The longer you have on your lease, the more expensive it’ll likely be to buy out your lease.
• It may make sense to buy out a lease early if you have positive lease equity (your car’s market value is higher than the total cost of the buyout) or you’re close to the end of your lease and want to avoid wear and tear or other fees.
• Other options to end your lease early include rolling over into a new lease, trading in the vehicle, or transferring the lease.

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Can you buy out a lease early?

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You can buy out your lease early, but it’ll cost more than if you do so at the end of your lease. That’s because ending your lease early typically results in early termination fees and other penalties that increase your buyout costs. Here’s a quick breakdown of the charges that make buying out your lease early more expensive:

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• Early termination fees: This charge is typically non-negotiable and charged by dealerships (lessors) to penalize you for ending your lease early. 
• Remaining lease payments: Some lessors require you to pay all or part of your remaining monthly payments before allowing a lease buyout.

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These two charges can add thousands to your lease buyout fees, which typically include:

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• Purchase price (residual value): It’s the estimated value of the car at the end of the lease, and you must pay it to own the vehicle. It’s fixed, non-negotiable and clearly stated in the lease agreement.
• Document and administrative fees: These dealer-imposed fees cover processing the paperwork needed for the buyout.
• Sales tax: It varies between states, and the lessor typically applies it to the vehicle’s purchase price.
• Title and registration fees: These government-mandated fees are necessary to receive ownership and register the vehicle in your name.

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When an early buyout might make sense

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While buying out your lease early can increase the fees, there are situations where it makes sense to go through with it. These scenarios include:

• Positive equity: You have positive equity if your leased car is worth more than the cost of buying it out. You can cash in that equity by buying and reselling the car for a profit, or simply put it toward a down payment on your next car.
• Little time left on your lease: If you only have a few months left on your lease, buying it out early won’t cost as much. Plus, it may help you avoid mileage or wear-and-tear penalties if you’re close to exceeding the limits stated in the contract.
• Rising loan rates: If interest rates are rising and you intend on financing your lease buyout, waiting could limit you to high-interest loan options. Buying out early while interest rates are still favorable could help you save money.

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When an early buyout doesn’t make sense

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Buying out your lease early may not be your best move in these scenarios:

• Negative equity: This happens if your car is worth less than the cost of buying it out, causing financial loss. Instead of taking the hit, you can let the lease expire and return the car.
• Dropping loan rates: If interest rates are dropping, buying out your lease while rates are high isn’t financially wise. Instead, wait for more favorable rates before buying out.
• Too early: Buying your lease long before it ends may lead to higher buyout costs, especially if the lessor wants the remaining monthly payments. 

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How to buy your leased car early

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If you’ve decided to buy out your lease early, here’s how to go about it:

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1. Review your lease agreement

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Read through your lease agreement to understand its early buyout terms. These terms usually include the fees, cost, process and whether you’ll owe the remaining lease payments.

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2. Calculate the lease buyout cost

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Several charges make up the total buyout price, including the residual value. Other typical early buyout charges include early termination fees, sales tax, document fees, title fees and the remaining lease amount. The lessor may also charge penalties if you’ve exceeded mileage limits or damaged the vehicle. 

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Add up all these charges to calculate your total buyout cost. Alternatively, contact your lessor to discuss buying out your lease early and get the total buyout amount from them.

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3. Evaluate your car’s market value

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You can check your car’s current market value with online tools like Kelley Blue Book (KBB) or Edmunds. If your vehicle is worth more than the total buyout cost, you have positive lease equity and won’t lose money buying out early.

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4. Decide how to pay

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If you can’t afford to buy out your lease out of pocket, you can finance it with an auto loan. Compare rates from different lenders to find the best one and save money by choosing a lender that offers discount financing. 

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5. Initiate buyout

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Let your leasing provider know you want to buy out the lease early. They’ll tell you what to do next, including the paperwork to provide, such as a written buyout request, proof of identity and proof of financing if you're using a loan. Your lessor may also require a vehicle inspection before completing the buyout.

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6. Complete the paperwork and payment

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Sign any required documents and pay the agreed buyout fees and charges. Once payment is complete, the lessor will transfer the title to your name, making you the vehicle’s official owner.

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Alternatives to an early buyout

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If an early buyout isn’t in your best interest, such as if you have negative lease equity, here are some other ways to break your car lease:

• Rollover the lease: You can wait until your lease ends to start a new lease or end it early by rolling the remaining payments into a new lease or loan. If you choose the latter option, your remaining lease payments will carry over into your new lease, potentially leading to higher monthly payments. 
• Trade-in: If you have positive equity, you can trade in your leased car at a dealership and apply the equity toward a down payment for a new lease or purchase.
• Transfer the vehicle: If your leasing provider allows transfers, you can legally pass your lease to someone else. The new lease holder will take over the remaining payments and other contractual responsibilities. 

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Finance your lease buyout with RefiJet

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An early lease buyout is worth it if you want to switch to a cheaper car or if the leased vehicle is worth more than the buyout price. However, the earlier you buy out, the higher the total costs might be.

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Are you ready to buy out your lease early? Get a lease buyout loan with RefiJet. Our fast and user-friendly services connect you with lenders offering competitive interest rates. 

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FAQs

Here are answers to some common questions about how to buy out your lease early:

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Is it recommended to buy out your car lease early?

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An early lease buyout makes sense if your car is worth more than the total buyout cost. It may also be a smart move if you’re nearing the end of your lease and want to avoid excess mileage or wear-and-tear penalties.

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Does it cost more to buy out a car lease early?

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Yes, an early lease buyout typically costs more due to penalties like early termination fees and paying the remaining lease. These charges can add hundreds or even thousands to the total buyout cost.

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Can I negotiate my early lease buyout?

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Some early lease buyout fees and charges are negotiable, while others aren’t. For instance, the residual value is non-negotiable, but inspection and purchase option fees may be negotiable.

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What are the risks of buying out a lease early?

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The biggest risks of buying out a lease early are high upfront costs and losing money if your car is worth less than the buyout cost.

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Can I finance an early lease buyout?

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Yes, many lenders offer buyout loans to qualified borrowers. RefiJet helps you compare offers from multiple lenders to find the loan terms that suit you best.

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