Can You Negotiate a Car Lease Buyout?

Many lease agreements allow buyouts, where you pay the remaining value of the vehicle to keep it when the lease expires. Although there’s not much you can negotiate in a lease buyout, you occasionally have a little wiggle room. We’ll show you what you can negotiate and other ways to keep your costs down when buying out your lease.

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Key takeaways

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• There are several factors that affect the cost of a lease buyout, including residual value, purchase option fees and sales taxes.
• You’ll probably find it tough to negotiate the residual value of the vehicle, since it was calculated up front and included in your lease agreement. 
• You may be able to negotiate ways to save money on some of the costs that aren’t fixed, such as avoiding early termination fees.
• The best way to save on a lease buyout is to time it right and shop around to find financing options with the best rates and terms.

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The costs associated with a lease buyout

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First, you should know what costs you can expect when buying out a lease. These should be included in your leasing agreement so you can see exactly what you owe. Typical lease buyout fees include:

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• Residual value: This is what your vehicle is worth when the lease ends. It accounts for wear, tear, and depreciation. Most lease agreements set the residual value of the vehicle up front.
• Remaining payments: You’ll have to cover any payments remaining on your lease before the vehicle is yours.
• Purchase option fees: Some lenders add a purchase option fee if you want to purchase the vehicle at the end of the lease.
• Early termination fee: You may owe an early termination fee if you end the lease early.
• Registration costs: You’ll have to pay to register the vehicle in your name in your state.
• Administrative fees: These might be termed “doc fees,” “documentation fees,” or “processing fees.” They cover the cost of changing over the paperwork to reflect the buyout.
• Sales taxes: Buying out a lease means purchasing the car, which triggers sales tax. Sales taxes vary depending on what state you’re in. 

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Why you usually can’t negotiate a lease buyout

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Most of the costs associated with buying out a lease are non-negotiable, fixed costs, like sales tax. The dealership can’t change the tax rate, and they can’t not charge you sales tax. That’s simply a cost you’re going to have to cover. The same goes for registration fees, which are set by the state and not optional.

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Changing the residual value isn’t so simple, either. The residual value may seem negotiable, but it was calculated up front and clearly stated in the leasing contract, which you signed. 

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It’s possible you might be able to negotiate a lease buyout. The dealership might find it better to negotiate a new deal with you than to take back the car and try to sell it to someone else. But in general, you’ll likely need to find other ways to save when your lease ends.

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How to save on your lease buyout

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It’s usually not possible to negotiate a lease buyout like a typical car purchase, but that doesn’t mean there aren’t ways you can save. The most important strategy to keep costs low is to time it right to avoid extra fees. Start the lease buyout process before your lease is up — but not so early that you’ll get dinged with early termination penalties. 

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Give yourself enough time to run the numbers to see if buying out the lease makes sense. If the buyout cost is less than the cost of replacing the car, it may be beneficial. It may also help you save on fees if the vehicle has been damaged or if you’ve gone over your lease mileage limit.

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If you decide a buyout is the right move, taking the time to shop around for the best lease buyout loan can help you save. Getting a favorable interest rate can save you hundreds, if not thousands, over the loan term. If interest rates are high when it’s time to buy out the vehicle, you can still refinance your auto loan later, which may help you recoup some of your costs. 

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FAQs

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Here are a few of the most frequently asked questions about negotiating a lease buyout.

Are lease prices negotiable?

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Yes, you may be able to negotiate different aspects of the lease, from the leasing cost to the buyout fee. If the dealer won’t negotiate on the residual value of the car, they may be willing to make a deal on other aspects, such as add-ons or mileage.

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How do you calculate lease buyout cost?

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First, find the residual value of the vehicle, which should be in the lease agreement. Add sales tax, registration fees and purchase option fees, which vary depending on the lease and your state.

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Can you negotiate residual value at the end of the lease?

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Some dealers may be willing to negotiate the residual value at the end of the lease, especially if there’s a significant difference between the residual value and the current market value. But don’t be surprised if they decline to make a deal, especially if they could get more by putting the car up for sale.

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When is the best time to negotiate a lease buyout?

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You’ll need to negotiate the buyout before the lease expires. If you still have payments remaining on the lease, you’ll have to cover them. You may need to pay an early termination fee as well if you end the lease early.

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What if the market value of the car is less than the buyout price?

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If the car is worth less than the buyout price, it probably doesn’t make financial sense to buy it. You’d be paying more than the vehicle is worth.

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