Lease Buyout Cost Calculator
Use this calculator to estimate the total cost of buying out your leased vehicle, whether at the end of your lease term or early. Understanding these costs helps you make an informed decision.
Estimated Buyout Details:
Residual Value: $0.00
Cost of Remaining Payments: $0.00
Purchase Option Fee: $0.00
Outstanding Charges: $0.00
Subtotal Before Tax: $0.00
Estimated Sales Tax: $0.00
Registration & Title Fees: $0.00
Total Estimated Lease Buyout Cost: $0.00
Understanding Your Lease Buyout: A Comprehensive Guide
Deciding whether to buy out your leased vehicle can be a significant financial decision. A lease buyout allows you to purchase the car you've been leasing, either at the end of your lease term or sometimes even before. This guide will break down the components of a lease buyout and help you understand the costs involved.
What is a Lease Buyout?
A lease buyout is the process of purchasing your leased vehicle from the leasing company. This option is typically outlined in your original lease agreement. There are two main types of lease buyouts:
- Lease-End Buyout: This is the most common type, occurring when your lease term is complete. The buyout price is primarily based on the residual value of the vehicle, as stated in your lease contract.
- Early Lease Buyout: Some lease agreements allow you to buy out your lease before the term ends. This usually involves paying the residual value plus the sum of your remaining monthly payments and any associated early termination fees.
Key Components of a Lease Buyout Calculation
To accurately estimate your total lease buyout cost, several factors come into play. Our calculator above incorporates these elements:
1. Vehicle Residual Value
This is the estimated value of the vehicle at the end of your lease term, as determined by the leasing company at the beginning of your lease. It's a crucial figure, as it forms the base price for your buyout.
Example: If your lease agreement states a residual value of $15,000, this is the starting point for your purchase price.
2. Remaining Payments (for Early Buyout)
If you choose to buy out your lease before the contract ends, you will typically be responsible for paying the sum of all outstanding monthly payments. This effectively "closes out" your lease agreement.
Example: If you have 6 months left on your lease at $350/month, you would add $2,100 ($350 x 6) to your buyout cost.
3. Purchase Option Fee
Many lease agreements include a "purchase option fee" or "buyout fee." This is a small administrative charge from the leasing company for processing the sale and transferring ownership. This fee is usually specified in your original lease contract.
Example: A common purchase option fee might be $200-$500.
4. Sales Tax
Just like purchasing any other vehicle, you will be required to pay sales tax on the buyout price. The sales tax rate varies by state and sometimes by local municipality. It's usually applied to the sum of the residual value, remaining payments (if applicable), and the purchase option fee.
Example: If your subtotal before tax is $15,500 and your local sales tax rate is 7%, you would pay $1,085 in sales tax.
5. Registration and Title Transfer Fees
When you buy out your lease, you are transferring ownership of the vehicle from the leasing company to yourself. This process involves standard government fees for vehicle registration and obtaining a new title in your name. These fees vary by state.
Example: These fees can range from $100 to several hundred dollars depending on your state.
6. Outstanding Charges
If you have any outstanding charges on your lease account, such as excessive mileage fees, wear and tear charges beyond what's considered normal, or unpaid parking tickets, these will be added to your total buyout cost. It's important to review your lease agreement and vehicle condition to anticipate these.
Example: If you exceeded your mileage limit by 5,000 miles at $0.20/mile, you'd owe an additional $1,000.
When Does a Lease Buyout Make Sense?
Consider buying out your lease if:
- You love the car: If you're attached to your vehicle and it meets your needs, buying it out can be simpler than finding a new one.
- The residual value is lower than market value: If the car's actual market value is significantly higher than the residual value stated in your lease, buying it out can be a great deal.
- You've exceeded mileage limits or have excessive wear and tear: Buying the car out can save you from hefty penalties for over-mileage or damage charges that would apply if you returned the vehicle.
- You want to avoid lease-end fees: Returning a leased car often comes with disposition fees, inspection fees, and potential charges for minor damage. Buying it out bypasses these.
- Interest rates for financing are favorable: If you need to finance the buyout, low interest rates can make the purchase more affordable.
Always compare the total buyout cost to the price of similar used vehicles on the market to ensure you're getting a fair deal. Consulting with your leasing company and a financial advisor can also provide clarity for your specific situation.