There are many reasons that someone may opt to lease a car over purchasing one. Leasing a car means lower monthly payments, fewer repair expenses, and not needing to worry about selling the vehicle when you’re done with it. In fact, you can walk into a dealership when your lease is up and walk out with a newer model to lease -or- you may have the option to buy out the lease and keep the vehicle. The buyout option is attractive to some leasers. Here are a few things to think about before you sign on the dotted line.
Reasons to Buyout
- You know the history of the car. Since you have been driving the car, you know how well it runs and how it was maintained.
- High Excess Mileage Fee. Between 12,000 and 15,000 miles is a typical range that can be expected for mileage limits in leases. Excess mileage fees can be between 10 and 30 cents which can rack up an excessive fee if you significantly go over your allotted mileage.
- High Wear and Tear Fees. Scratches, dents, or tears on the interior can all be grounds for wear and tear fees. If the car ends up in subpar condition, you may want to buy rather than get hit with wear and tear fees.
- The Residual Value is Lower than the Market Value. If you went under on your allotted mileage, the market value of the car could be considerably higher than what was established as the residual value in your contract.
- You Negotiate a lower buyout price. Everyone wants to feel like they are getting a deal. Buying the car for the wholesale price instead of the retail price is what you should shoot for. Talking to a lease-end manager will better your chances of negotiating a lower price.
Reasons to Pass
- The Purchase Option Fee. The leasing company likely has a purchase option fee in the leasing agreement. Make sure the price of the car is still worth it with the additional purchase option fee included.
- The Residual Value is Higher than the Market Value. If the residual value of the car is considerably higher than what the car is valued on the market, you are not getting your money’s worth.
- Early Termination Fees. If you try to purchase the car early in the lease agreement, an early termination fee is often required.
If after weighing the pros and cons you decide to buy, consider Bridge Credit Union for your financing needs. Click here to learn more.