To complete a lease buyout, you should pay the residual value of your car, which is specified in your lease agreement. You should also expect the dealership to charge extra expenses for processing the buyout.
When you buy out a car lease, you usually pay lease buyout dealer costs. Under typical circumstances, these costs make up only a small fraction of the total buyout price, but understanding how much they build up is still significant. Buyout fees vary per dealership and can take several forms. The following are the typical costs that dealers charge for a lease buyout:
Most lease agreements include a purchase option fee that you must pay in order to exercise the option to buy out your lease. This is normally a few hundred dollars, which you can roll into future loan payments if you plan to finance your lease buyout.
- Processing fee
When you buy a leased vehicle, your dealership must conduct some research and paperwork to complete the buyout. So you can expect to pay for your time and effort. Some dealerships additionally charge a processing fee.
- Early termination fee
If you decide to buy out your lease before it expires, you will most likely be charged an early termination fee. The amount you pay depends on when you quit your lease. Waiting until the end of the term to buy the car often results in a better value. Check your lease agreement to learn how your dealer handles early buyouts.
One advantage of acquiring a leased car at the conclusion of its lease term is that you will not have to pay a disposition fee. Your leasing firm charges this fee to cover the cost of reselling the vehicle. So, if you buy the car from them through a lease buyout, they will waive this fee.
Furthermore, you will not be responsible for any extra mileage or wear and tear fines. These fees can be hefty if you have driven much more miles than the lease allows or have damaged the vehicle. In reality, many lessees purchase their leased vehicles to avoid paying high penalties.
Beware that unscrupulous dealers may charge you unexpected or deceptive fees in order to increase earnings, especially if your leased car is worth more than its residual value. Dealers have also given buyout prices that are much greater than those indicated in the initial lease contract. Here are some instances of possible unlawful lease buyout dealer costs to keep an eye out for:
- Vehicle service fees;
- Certification fees;
- Pre-delivery service fee;
- Excessive state inspection fees.
Generally, you should only pay the lease buyout dealer costs specified in your lease agreement. Also, don't allow your dealer to charge you more than the specified sums.
Can You Negotiate Lease Buyout Dealer Fees?
Many vehicle dealerships have a no-negotiation policy for lease buyouts, which leaves little space for haggling. This is because all of the terms and conditions are agreed upon and mentioned in the lease agreement. In most cases, a dealer has little incentive to let you negotiate your lease buyout. Dealers may opt to return the vehicle and replenish their pre-owned inventory.
However, if the car market isn't doing well, dealerships may be more keen to sell you the leased vehicle so they don't have to seek for another customer. In this instance, your dealership should be prepared to accept a lesser price.
The residual value of a leased car is usually fixed and non-negotiable. Nonetheless, you might lower the overall cost of your car purchase by negotiating lease buyout dealer costs. Depending on the circumstances, some dealers may agree to forgo the purchase option cost in order to sell you the vehicle. It's worth asking because you could save hundreds of dollars if successful.
You can also negotiate a processing or document fee for your lease buyout. You may be able to negotiate with the dealer to remove or reduce this fee. While it is not required to complete a lease buyout, certain jurisdictions cap the processing charge, so make sure you aren't spending an exorbitant amount if the fee cannot be waived.
If you choose an early buyout, you have a minimal chance of avoiding the early termination cost and any associated penalties. Your dealership will urge you to wait until the conclusion of your lease to purchase the vehicle so that you do not incur additional fees. As a result, they will very probably reject any attempts to negotiate the early termination charge.
What Other Fees Should You Pay When Buying Out Your Lease?
When you purchase the vehicle you're leasing, your dealership transfers certain ownership charges to you, such as title transfer, registration, and licensing fees.
Sales tax is another item to consider. Depending on your lease terms and state, you may already have paid all or a portion of the applicable sales tax on your leased vehicle. Most states require dealers to incorporate sales tax into monthly lease payments, however others may compel lessees to pay the entire sales tax on a lease upfront.
When purchasing a leased vehicle, you must also be ready to meet additional state criteria. This includes car safety inspections and emissions tests. Fortunately, the prices for these inspections are reasonable.
