While there are several different ways to buy out a lease, all car lease buyout definitions can be summarized as follows: you’ll pay off whatever remains of your lease, take out a new loan to cover the rest of the vehicle’s cost, and work to pursue full ownership over time! Now that you’ve got the basics down, how does a lease buyout work? Explore the ins and outs of lease-end buyouts and early lease buyouts with our financing team.
Drivers who wonder “what is a lease buyout?” may be looking for one of two answers. Are you buying out an active lease, or buying out a lease that’s already run its course? These two courses of action correspond to early lease buyouts and lease-end buyouts, respectively, and they’re usually supposed to accomplish different things:
Before you choose to buy out a lease, familiarize yourself with the differences between buying and leasing. They’ll still apply as you move forward.
Early lease buyouts are less common than lease-end buyouts, but they’re far from unheard of. Here’s when you’ll want to consider this option:
The price of an early lease buyout is determined by the amount still outstanding on your leasing agreement, plus the vehicle’s estimated residual value–usually determined at the start of your lease. There might also be (smaller) additional fees that need to be taken care of before you can drive home to Sewell or Williamstown.
An early lease buyout is not a good idea if the vehicle is already worth less than the estimated residual value, as stated in your contract. Still, if you can’t afford the lease-end fees, it might be your best option! (If you do have a lot of lease-end fees to deal with, you might be able to use the reward points on your BMW Credit Card to soften the blow.) In a pinch, you can sell the vehicle later and work to pay off the remaining loan balance separately.
Lease-end buyouts are almost always much happier occasions. Even if you’ve stayed within the bounds of your contract, you might consider a lease-end buyout if:
Pricing for a lease-end buyout is usually written into your contract: the dealership will make an estimate of how valuable the model will be at the end of your term. Fees shouldn’t be an issue, but you will most likely want to make an additional down payment. You’ll also pay tax on the vehicle’s full value, as you would with any other purchase. BMW Select Financing may be available to those who want to secure a lower monthly payment moving forward.
A lease-end buyout is not a good idea if you don’t want to be saddled with the responsibility of ownership. It’s also something to avoid if you could get a nicer, newer vehicle for less than the buyout cost that’s stipulated in your contract. Lastly, it’s rarely a good idea to commit to a vehicle that’s experienced major problems or been in a significant accident.
BMW of Turnersville makes it easy to lease a new BMW that you love, and we’re here to help if and when you decide to pursue a lease buyout. Start exploring our new inventory or–if you’re already leasing–contact our lease return center to get an even better sense of your options. We’re always just a short drive away from Philadelphia.