What is a Lease Buyout?

A lease buyout is when a dealership allows you to purchase a leased vehicle before the end of the contract. If you are considering a lease buyout it is important that you know there are two buyout options for you to choose from. Learn more about these two options from the finance experts at Sullivan•Parkhill Automotive Inc in Champaign.

Lease-End Buyout

A lease-end buyout is the most common option. With this type of buyout you to pay what the vehicle is expected to be worth by the end of the lease period. The price point is usually agreed upon before you sign the lease agreement. This choice is a good deal if:

• You are happy with the vehicle
• There have been little to no repairs since you’ve had the car
• There’s no other similarly priced vehicle that you’d like better
• You can lock-in a favorable interest rate to finance the buyout price

Another advantage is that you already know about the condition and history of the leased vehicle, unlike when purchasing a different used car.

Early Lease Buyout

Choosing this option allows you to purchase the vehicle before the end of the lease contract. An early lease buyout isn’t always offered on a lease contract, so be sure to confirm that this is an option for you. If you are considering an early lease buyout, you’ll also want to be sure it’s worth the long term investment to buy instead of lease, while taking into account the history of the vehicle. The early lease buyout price is determined by:

• The lease-end residual value as listed on the original contract
• The amount you still owe on the lease
• If the vehicle depreciation is below the market value, you may have to pay the difference 

Buyers usually consider an early buyout when they anticipate getting hit with lease penalties like exceeding the mileage limit, not maintaining scheduled services, or if the interior or exterior of the vehicle has been damaged.

Learn More at Sullivan•Parkhill Automotive Inc

Now that you understand how a lease buyout works you can select the option that best suits your needs in the Danville and Champaign area. Remember to review your lease contract, assess the condition of the vehicle, and find out what the purchase price is to see if it is an investment that makes sense for you. Check out the benefits of buying a used car, and see if a certified pre-owned vehicle is a better choice. If you have any questions, or would like more information, please contact us.