BUY YOUR LEASED VEHICLE

With new vehicle inventories at historic lows, buying out your existing lease may be the smart choice for you. But it’s important to run the numbers before you decide.

Below are some tips to help you make the choice that’s right for your individual situation. If you need more help, our Radius loan experts are here for you.

1. Find the residual value in your lease agreement. When you lease a car, truck or SUV, you’re paying the car company for the predicted depreciation of that vehicle. Your monthly lease payment includes this depreciation and a fee that goes to the leasing company to cover administrative costs. At the end of your lease, you’ll have paid the car down to its “residual value”, which is the car company’s prediction of what your vehicle will be worth at the end of your lease term.
2. Check the market value of your vehicle. There are several websites like Edmunds or Kelley Blue Book that can help you find your vehicle’s market value. By inputting your car’s make, model, and year and providing additional information about mileage and condition, you can see the market value of your vehicle. (Be sure to look for the market value rather than a trade-in estimate.)Keep in mind that there are factors the car company couldn’t predict that may actually cause the market value of your vehicle to be higher—especially right now. With new car inventories at historic lows, quality used cars are in high demand. You may also find that you haven’t put as many miles on your vehicle. Factors like can drive market value up.
3. Compare the residual value with your car’s current market value. If your vehicle’s market value is close to or higher than the residual value stated in your lease, buying out your lease may be a great deal. But if the market value is lower than the residual value, it may be best to walk away—unless you really love your car or simply can’t find another vehicle that fits your needs.
4. Consider other factors that can impact cost. Check your lease agreement to determine if there is a purchase option fee and how much it will add to the cost. On the other side of the equation, consider your vehicle’s mileage and condition. Have you gone over the limits stated in your lease or incurred excess wear and tear? If so, you could be faced with additional penalty fees if you turn in your vehicle, and a buyout may be the better choice.

You can use our loan calculator to estimate what your monthly payments would be to buy out your lease with an affordable auto loan from Radius FCU. If you need additional help, call one of our loan experts at 716-875-1747 or stop by our branch at 2853 Delaware Avenue in Kenmore.