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5 Reasons Why You Should Buy Your Leased Car

As the final months of your car lease tick down, your decision is to buy your leased car or turn it in. In fact, the leasing company, or the dealer where you leased it, is probably already bugging you to turn in the vehicle early and lease another. Time is running out to pick: return or keep.

Other than the ease of writing off those lease payments as a business expense, if you qualify, the key reasons for leasing are lower monthly payments and the opportunity to move to a new car every two or three years. All three will factor into your return-or-keep decision process.

What Does Leasing a Car Mean?

The key to leasing is depreciation or the amount of lost value. It begins the moment you drive a new car, truck, or SUV off the dealer’s lot. On average, vehicles depreciate as much as 20 percent the first year, and by as much as 40 percent over three years. Chances are, you’re sitting on a 36-month lease. Your monthly lease payment was calculated to cover that lost three-year value plus interest on that money.

Leasing companies don’t know exactly how much a new car is going to depreciate over the length of a lease. So, they make a calculated guess, based mostly on past depreciation experience with that brand and model. Like Las Vegas oddsmakers, there are some third-party outfits, as well, that weigh in with educated estimates of a new car’s market value two or three years down the road. The remaining value of a leased car at the end of the lease is known as the “residual” in the residual value.

At the end of a lease, the best-case scenario comes when you have a well-maintained vehicle that hasn’t exceeded the total annual mileage cap. In which case, you may hand the keys to the leasing agent and walk away. It’s far from uncommon, however, that you have either exceeded the mileage, for which you may owe around $0.25 per extra mile, or there is more than normal wear and tear on the vehicle. The leasing company determines what is “normal” wear and tear.

You will be on the hook for excess mileage and whatever the leasing agent estimates the cost will be to repair those dings, dents, and any damage to the upholstery. Hey, you didn’t even notice that spot on the backseat, did you?

What are 5 Reasons to Buy Your Leased Car?

1. You Can Buy the Car for Less Than It’s Worth

The lease contract you signed many months ago specifies the residual for the vehicle. This is the guess the leasing agent made at the front end of the deal. If the leasing agent guessed wrong, the residual could be less than the current market price for that model vehicle. The good news: The residual is what you will pay (plus the usual fees) to buy your leased vehicle. You already ate the initial three-years depreciation with the lease. Why not take advantage of that?

As the used-car market is shaping up in 2021, it’s likely your leased vehicle is worth more than the price (residual) at which the leasing agent must sell it to you. According to Cox Automotive data, wholesale used car prices increased an average of 5.9 percent in March alone. That’s nearly a 6 percent jump in just one month. Thanks to the short supply of used cars, this trend is expected to continue throughout the year.

2. You Like The Car and Took Good Care of It

So, the love affair with that new car with which you were smitten years ago isn’t over. Nor should it be. If you like and feel at home in your car, why dump it? You’ve taken good care of it, followed the factory maintenance schedule, and didn’t drive it like you stole it, right? So, keep it. You had perfectly good reasons for leasing it in the first place. If they still hold up, why replace it?

3. You Are Facing a Big Punitive Assessment

Maybe you didn’t take as good care of your vehicle as you thought. Suddenly you are facing a big fee for excess wear and tear, or even worse. On top of that, you exceeded the mileage cap of 36,000 miles over three years. Missing it by just 1,000 miles will cost you $250 or more. You can avoid that big balloon fee at the end of the lease by simply buying the car.

4. You Want to Avoid the Hassle of Car Shopping

Although the internet has somewhat streamlined the process, shopping for a new ride can be exhausting. Unless you love the thrill of the hunt, you may want to just take the course of least resistance and buy the leased car. This is particularly true if you like the car. End-of-lease dealmaking with a lender is generally quicker and easier than starting from scratch with a new car.

5. New and Used Car Prices Are Higher

Carmakers are struggling to keep up with new car demand. The current microchip shortage is a fresh wrinkle in the auto industry’s attempt to keep pace with demand. Because of the short supply of new cars, there aren’t as many used cars making it to dealer’s lots. Consequently, the supply of used cars is thin, as well. According to Cox Automotive data, there are roughly 2.3 million used cars available in the United States today. This is a 530,000 drop from a year ago. Supply is tightening. Bottom line: You will pay more right now for new or used cars.

How to Buy Your Leased Car?

When you’ve made the decision to buy your leased car, alert the leasing agent. Unless you used an independent leasing company, the agent is probably the dealer where you struck the deal. Whoever has been nagging you about leaving your lease early to lease another car, that’s likely your agent.

From there, take the same steps you would follow to buy any new or used car. It’s a smart idea to shop around for financing to at least know the rate for which you qualify before sitting down with the leasing agent.

We recommend checking your specific car’s value so you go into the dealership armed with the information you need to make a great deal.

More Car Buying, Selling, and Trade-In Related Articles:

Editor’s Note: This article has been updated for accuracy since it was originally published.

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78 COMMENTS

  1. I started a lease for 3 year/36k miles, and then a year after got a new job where I had to commute 40 miles each way. Obviously way over on mileage now. I’m fine buying my car at end of lease since it’s in great shape and I’ve loved it. Any suggestions on how to go about the buyout process in the cheapest fashion? I looked at my residual and it’s about 5k higher than the blue book value (which probably means I’m a terrible negotiator when I started the lease?). 

  2. A Hyundai will never hold its value and be worth what you owe plus interest and taxes. You’ll always be better of just releasing a new vehicle with the newer technology and warranties. Unless you’re purchasing a car outright with cash, or have the pink in hand. You don’t own it anyways. All cars only depreciate. 

  3. My lease ends June 2019 and my mileage is over, no fault of mine. I’ve been fighting with them about the mileage issue after a repair that took place when they had the car for two weeks waiting for part from California (they are in Md) for some kinda computer gliche. Car went in at 4,500 miles. I picked it up after repair completed at approx 4,560. Week later I brought it back because it was acting up. The mileage had jumped to 8,000. I had only driven it back and forth to work, 8 miles round trip. I questioned them. They couldn’t explain. I continued to see the mileage double and I’ve complained to no avail. My question, if I go to another dealership to purchase a car, can I trade the lease in and not be charged for over mileage cause they will pa the car off? It’s a 2015 Acura

    • If you trade the car in, you will not be penalized because the manufacture is not receiving the vehicle back and the contract is fulfilled. 

  4. If you decide to purchase your leased vehicle, never negotiate a leased vehicle  buy with with the dealership. Instead negotiate with the manufacturer. My Hyundai leased vehicle was financed through Hyundai Motors Finance. I was able to get a much better deal. The dealership was out to make money, while Hyundai is interested in selling their vehicles.

    • How do you bypass the dealership to negotiate a better buyout with the (brand) Finance Company, do you not legally have to return the car to the dealership even for a buyout?

    • You were able to receive a much better deal because 1) Hyundai already made money off of interest charges during your lease term. 

    • 2 ) The dealer has a set cost that they have to purchase it for, which the manufacture can beat, partly because they are basically making money off you twice. 

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Russ Heaps
Russ Heaps is an author specializing in automotive, financial and travel news. For nearly 35 years he has covered the automotive industry for newspapers, magazines and internet websites. His resume includes The Palm Beach Post, Miami Herald, The Washington Times and numerous other daily newspapers through syndication. He edited Auto World magazine, and helped create and edit NOPI Street... Read More

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