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If you’re leasing your current vehicle, you may have received an offer from the dealership to “buy back” your lease. While it may sound similar to a lease buyout, a lease buyback is something else.
In a lease buyback, the dealer offers to buy the vehicle back from you before your lease is up. With a buyout, you’re the one paying to keep the vehicle. We know that lease terms can sometimes be confusing, so let’s dive into the difference between these two concepts below.
A lease buyback is a transaction the dealer initiates, not you. They are the ones to lease and buy back the car. In a lease buyback, the dealer offers to buy your leased vehicle, even though your lease hasn’t expired yet.
Dealers might offer a buyback on desirable car models they’d like to add to their inventory. Another reason a dealer might offer a lease buyback is if you’re considering buying a new vehicle from them but need to wait out the rest of your lease. If the dealer buys back your lease, you’re free to purchase the new car, and the dealer can sell the leased vehicle for more than they paid.
A car buyback could make financial sense, but it depends on your situation and what you want to get out of it. You’ll need to run the numbers to know for sure:
A lease buyout is where you buy the car at the end of the lease. In some cases, you may be able to buy out the lease before it expires, although early termination fees may apply. Early termination fees may include all your remaining monthly payments, making it more expensive to buy out your lease in the middle instead of at the end.
To buy out the lease, you’ll typically pay the leasing company the residual value of the vehicle, which was specified in the lease agreement, plus any applicable fees. You can pay cash for the buyout, or you can finance the purchase with a lease buyout loan. When the deal is complete, the vehicle now belongs to you — no more mileage limits or other restrictions.
A lease buyout could make sense in some situations. For instance, if the buyout amount is lower than the car’s current market value, you’d be getting a good deal. Another time a buyout could be wise financially is if you’ve gone over your mileage allowance. If you buy out the lease instead of turning it in, you may be able to waive the overage fees. And sometimes, you just fall in love with a car. Buying it out lets you keep it.
To know if it’s going to be worth it to buy out the car, check your lease agreement for the buyout amount and compare it to the current market value.
Nearing the end of your lease? It’s a good time to explore your options like returning it, accepting a lease buyback deal, or purchasing the car.
Which one is best for you depends on a few factors. Consider the following questions:
Do you like the car and want to keep it? A lease buyout may be your preferred choice. However, if your buyout costs are higher than what the car is worth, consider returning the leased car and shopping around for the same model privately to get a fair price.
Are you ready for something new? You may want to take up the dealer on their lease buyback option, or you could finish out your lease and return the car. If you’re ending a lease with positive equity, you may consider buying the car and selling it for a profit.
Research current vehicle values and review your lease agreement ahead of time so you can run the numbers and determine whether a buyback or buyout is a smart choice.
Navigating the end of a lease can be confusing, but RefiJet makes the lease buyout process simple. As a leading auto refinancing and lease buyout partner, RefiJet helps you quickly compare loan offers from multiple qualified lenders. Get started today.
The following are some of the most frequently asked questions about lease buybacks vs. buyouts.
The main difference between a buyout and a buyback is who is doing the buying. With a lease buyout, you buy the car from the leasing company, usually at the end of your lease. With a lease buyback, the dealer buys the car back from you sometime during your lease.
No, a buyout is when you buy the car at the end of the lease for a price settled in your lease agreement. If you sold the vehicle back to the dealer, it would be considered a lease buyback.
You shouldn’t count on getting a lease buyback offer. Automakers may sometimes offer lease buybacks to suit their business needs, but it’s not guaranteed. Also be aware that some automakers restrict third-party lease buyouts as well.
It may be possible to negotiate with the dealer offering the lease buyback, but it depends on how flexible the dealer is willing to be. Many times, you won’t be able to negotiate a buyout, but it couldn’t hurt to inquire whether the dealership has some wiggle room.
If your lease contract contains a purchase option, you should be able to buyout the lease, even if the dealership offers a buyback.
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