If your auto lease has ended or is about to end, there are a couple of options for what you can do. 1. You can turn the car back over to the leasing company; or two. You can buy out your leased car. Depending on your specific circumstances will determine whether or not it’s a good idea to buy out your leased car. If you don’t know where to start, then look no further than True Sky Credit Union! We have all the answers as to what to do regarding the end of your auto lease. Now before we jump into the ins and outs of lease buyouts, make sure to follow us on facebook and our other social media platforms to stay up-to-date about all things True Sky Credit Union including our important news and unexpected closures.
How a Lease Buyout Works
When you lease a car, you typically make a rather large payment upfront and small monthly payments over the entirety of your leasing term. A leasing term is typically 2-3 years. Once the loan is paid off, the car is typically auctioned off through a dealership–OR the leasing company might give you the opportunity to buy it. If buying is an option, then it will be stated so in the lease agreement with a purchase or buyout price. This is a combination of the car’s projected end-of-lease value that’s established before the start of the lease, and some leasing companies may charge a purchase option fee. *Note that the lease payments made on the car don’t go towards the buyout cost. Now with that note in mind, most leasing companies have the common sense to contact you a couple months before your lease term ends, giving you time to scrape together the funds for the buyout option. They most likely will also request that you get an inspection done before turning the car back in–regardless of a buyout or not.
When to Buyout Your Lease
Alright, so you might be wondering, “when should I buy my leased car?” The answer to that question is different for everyone depending on their circumstances. Below we have listed four questions to ask yourself before committing to buying out your car lease.
1. Did you exceed your lease mileage limits?
Car leases typically come with a mileage limit, and if broken, there’s a penalty. The mileage limit is usually between 10,000 and 15,000 miles. For every mile driven over the leasing limit, a 25 cent fee is charged. To put that into perspective, say you drove 15,000 miles over your mileage limit. You would end up paying $3,750 when you turned in the car. If you owned the car, you wouldn’t have to worry about that.
2. Is the vehicle worth buying?
To see if a car is really worth buying, there are online sites like Kelley Blue Book, NADA, and others that base their prices off of the average of all the local car dealer’s vehicle prices of a specific make and model. If the car is worth less than the residual value that was projected at the start of your lease, you may not want to buy it. If it’s worth more, then it could be a bargain!
3. What’s the condition of the car?
Looking at the real condition of the car and thinking about its longevity will help you buy with more confidence. However, if you return your leased car with a bunch of scratches, dents, and other body damage, then the lessor will charge you the price it is to fix it. If you purchased the car, this could be easily avoided; you can always fix the damages on your own time.
4. What are the other costs that would come with this car?
When thinking about buying out your leased car, it’s important to consider other costs that come along with it. For example, paying higher registration and insurance costs on a newer car. But on the flip side, owning an older car inevitably comes with more mechanical problems, requiring a little more maintenance.
How to Pay for a Lease Buyout
So if you’ve decided to buy out your leased car and you’ve ended up here, then you’re probably asking yourself, “how can I pay for a lease buyout?” The answer is fairly simple! Get pre-approved for a car loan from a bank or credit union way before you even approach a leasing company. To increase your chances of getting an auto loan, make sure to check your credit score several months before you’re planning to lease. If you need help reviewing your credit report and credit score, stop by True Sky Credit Union in Oklahoma and one of our Sky Crew members will be more than happy to assist you.
Buyout Your Leased Car with True Sky Credit Union
We want to help you buyout your leased car by providing you with an auto loan. If you have any comments, questions, or additions concerning our auto loan options, give us a call, chat with us online, or stop by one of our 12 locations in person! We have a variety of services, including checking and savings accounts, auto, home, and personal loans, financial help resources, and more. If you’re interested in becoming a member or want to learn more about us, feel free to explore our website, call, or stop by one of our many locations throughout the Oklahoma area. We look forward to assisting you to the best of our abilities in helping you improve your finances in 2023.