Lease Buyout Meaning: How Lease Buyout Loans Work

Leasing a car lets you enjoy a new car with lower payments and more flexibility than buying. When the lease is up, all you have to do is pay your fees and return the vehicle. So what does it mean to buy out a lease, if returning the car is built into the contract? 

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Buying out a lease means that if you pay the remaining value of the car (and any associated fees), the car is yours to keep. Learn more about lease buyouts and how to finance the purchase of a leased car.

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Key takeaways

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• A lease buyout lets you purchase the vehicle you’re leasing instead of giving it back to the leasing company or dealer.
• A lease buyout usually happens at the end of the lease term, but in some cases, you may be able to do an early buyout if you pay the required fees.
• To buy out your lease, you’ll pay the residual value of the vehicle plus any fees charged by the lessor.
• Lease buyout loans from RefiJet let you finance the buyout amount and pay it back over time.

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What is a lease buyout?

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A lease buyout is when you choose the purchase option instead of the return option defined by your lease contract. Instead of giving the car back to the leasing company at the end of your lease, you pay them to let you keep the vehicle for yourself. 

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Lease buyouts let you take ownership of your leased car, which can be useful if you already enjoy the vehicle and want to keep it. It also lets you avoid having to pay some lease-end fees, like mile overages. When you buy out your lease, you pay what the leasing company estimates the vehicle to be worth at the end of the lease. You can pay this amount in cash or finance it with a lease buyout loan.

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Can you buy out a lease early?

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If you want to get out of your car lease early, you may be able to buy out your lease before the lease agreement expires. This is considered an early lease buyout. 

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Early lease buyouts will incur a fee, plus you’ll have to cover your remaining lease payments in addition to paying the residual value. Financially, it might be better to continue leasing the vehicle until the end of the term.

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How a lease-end buyout works

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Most people choose to buy out their lease at the end of the lease term. At this point, you’ll need to pay the buyout price plus any additional fees or costs. The lease buyout agreement will let you know what to expect, including:

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• The vehicle’s residual value: This is the price you’ll pay to buy out the lease, based on the car’s expected value at lease end. Residual value accounts for the car’s depreciation over the term of the lease.
• Early termination fee: If you buy out your lease early, you may have to pay an early termination fee in addition to the remaining lease payments and residual value.

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In addition to the fees charged by your leasing company, you’ll also have to pay state-specific costs such as sales tax and vehicle registration fees.

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Should you buy out your leased car?

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A lease-end buyout could be a great deal for you, especially if the buyout price is lower than what the car is worth. It could also help you avoid costly mileage overage fees and other charges. However, there are some cases when buying out your lease won’t help you save money. Before you decide if you should buy your leased car, you’ll need to consider whether it makes sense for your situation. 

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When a lease buyout makes sense

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There are some scenarios where the benefits of a lease buyout are clear:

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• You love the car and don’t want to give it up
• The car’s market value is higher than the residual value
• Buying out the lease is less than the cost to replace the car
• You want to avoid excess mileage charges or wear and tear fees.

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When a lease buyout may not make sense

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However, buying out your lease may not be in your best interest in some cases, such as:

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• You’ll have to empty your savings to pay for it
• The vehicle is unreliable or has mechanical issues
• The purchase price is higher than the market value of the car
• You prefer driving newer cars (or you just want something different)

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Finance your lease buyout with RefiJet

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If you’re considering a lease-end buyout, but don’t have the entire price of the car available in cash, a lease buyout loan could be the solution. Financing a buyout lets you purchase the car you love and pay for it over time. 

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In addition to auto loan refinancing, RefiJet offers lease buyout loan options that can make it simple to finance your leased car. Get started with a quick online prequalification to see your personalized options and choose the offer with the best rate and terms for your situation. 

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FAQs

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Below are some of the most frequently asked questions about lease buyouts.

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What does lease buyout mean?

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A lease buyout is when you purchase your leased vehicle instead of returning it at the end of the lease term. Your lease agreement will include the buyout price if this is an option.

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What are the possible downsides to buying out a lease?

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Buying your lease is a big commitment. Drawbacks to buying out a lease include losing out on leasing perks such as lower payments or driving a newer car every few years. You’ll also have to pay fees to close out the lease and register the vehicle, as well as sales tax if your state charges it.

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Should you buy your currently leased car?

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To decide if you should buy your leased car, ask yourself whether the car is in good condition, whether the price is higher or lower than the car’s value, and how much you’ll need to pay to purchase the car. Also consider whether you plan to drive the car for a long time or if you prefer something newer.

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Can you buy out your current lease early?

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You might be able to buy out your current lease ahead of time, but it depends on your lease agreement. Check whether early lease buyout is an option and, if so, how much it will cost. There are often additional fees for an early buyout.