How to Calculate a Lease Buyout

Have you recently gotten a car lease in Houston and decided you want to buy your leased car? The finance experts at Big Star Buick GMC can help. Learn more about how much you’d be paying with our team using our guide on how to calculate car lease buyouts on leased vehicles and more in the meantime!

Buying Out Your Lease: Is it Worth It?

In your monthly statement, you may see the terms Buyout Amount or Payoff Amount. The buyout amount includes the residual value of the vehicle at the start of the lease, the total remaining payments, and possibly a car purchase fee (depending on the leasing company). If you don’t see this value listed, or if you prefer to do your own calculations on your lease buying, follow the steps below:

1. Determine the residual value of the vehicle.
   This information will be found in your lease contract, as it was calculated at the beginning of the lease. This value is the estimated future value of the vehicle by the time the lease contract ends.
2. Determine the actual value of the vehicle.
   Your car may have decreased in value from when the lease began, due to unavoidable depreciation, or any wear and tear from driving. Or, if you’ve driven your vehicle less than the average 12,000 miles per year, it may not have decreased in value as much as you’d think. Use a service like the Kelley Blue Book Value Your Trade tool to assess the current market value of your car.
3. Compare the residual value and the actual value.
   If the actual value ends up being higher than the residual value from your lease contract, then purchasing your vehicle might be a good deal. If not, you may be able to negotiate with the dealer on the purchase price.
4. Account for license and registration fees.
   If you buy the car that you’ve been leasing, that means that certain costs of ownership are transferred from the leasing company to you. This includes title transfer costs, licensing, and registration fees. You can learn more about the fees on your state DMV site, and check with your leasing company for any of their fees.
5. Account for sales tax.
   There is a local sales tax rate when you buyout your vehicle, which you may also find on your DMV site or state government website.

Lease-End Buyouts vs. Early Lease Buyouts

Lease-End Buyouts: If you’re getting closer to the end of your lease, you’ll most likely be able to negotiate a better buyout price. If the dealer thinks you’re planning on selling it back to them, they may offer you a better deal to keep the vehicle.

Early Lease Buyout: You won’t really have much wiggle room negotiating the purchase price if you are trying to end your lease agreement early. Whether due to too much vehicle wear and tear or danger of exceeding the mileage limits, the dealer knows they have more leverage in the situation if you are trying to prematurely end your lease.

Rely on Big Star Buick GMC For More Automotive Tips

Should you have any questions about lease buyout loans, what a lease buyout is, auto loan interest rates, to learn what liability insurance covers, if you should buy vs. lease, or how to get the process started, contact our team. Our finance experts are standing by to ensure you have all the information you need to make the right choice for you and your driving needs.