When the lease a car contract’s expiry time comes closer, it is crucial to determine whether you want to turn in the car or buy it. Lease a car is a different process than buying a vehicle. In the former, the leasing company is the owner, but you are liable for the car condition on lease expiry. You cannot treat the car as you please. During lease end, you need to determine whether to return or negotiate a buying deal with the rightful owner.
For example, if you used the car properly and managed to drive within mileage limitations as defined in the lease agreement, then return the keys to the Lease a Car Direct Service provider and walk away. If the car is dented or displays excess wear & tear then you will be charged extra, which can exceed the deposit amount then there is a lot to think about.
Some good reasons lease car buyout is a sensible thing
The purchase price is lower than the market value
What your car is worth after 2 to 4 years is called the residual value. The leasing company includes it in the leasing contract. Residual value [RV] is used to determine the monthly lease payment. [Monthly payment = car’s original price – residual value].
If the assumption of the leasing provider is wrong and RV is set very high then the monthly payment will be lower than necessary. In case, the RV is set very low, then buyout at the expiry of the lease is worthy. The leasing companies resell returned cars to dealers directly or at an auction. So, they are prepared to negotiate a buyout price to avoid the cost and hassle.
Car is in good shape
You were a responsible drive and caretaker of the car. It is in perfect shape inside and outside. You are familiar with the car as you have been driving it for 3 to 4 years. If you still adore the car, when the lease end’s then buyout is a sensible move.
Car is in bad shape
Lease car buyout is logical if the shape of the vehicle is good but if it displays the way you handled it then expect to get penalized. The tiny dings, scratches, and dents you feel will not be considered then you are wrong.
The leasing company will evaluate it differently. Remember, huge damage means a large penalty. To avoid lease-end penalties buyout the car seems a cool alternative.
Excess mileage
The residual value estimation is done after the mileage amount is defined. In general, the dealer offers 12, 000 miles/year. It means in a three-year lease agreement the limitation is equivalent to 36, 000 miles. If this limitation exceeds then you will be charged extra for every mile driven.
Your lease contract will include the per-mile penalty fees that can run around $0.25 per mile. It means for an extra 1,000 miles you will have to pay $250. Dodge these penalties with a buyout.
Avoid car shopping hassle
Car shopping is thrilling but takes time and effort. If you buy the leased car that has been serving you for the last several years can save you from the frustration of going car shopping again. However, you will need to do some research and prepare for negotiation, but the stress is much less than initiating a buying process from the scratch.