Here’s a truth bomb: Leasing a car is not recommended for most people. It is confusing, expensive in the long run, and leaves no room for customization of your vehicle. Many people end up paying thousands of dollars in car repairs, only to realize they’ll have to return the car once the lease agreement comes to an end. If this sounds relatable, buying out your car lease can be the right financial move.

Let’s take a closer look at how a lease buyout works and how you can do it with minimal stress.

How Does a Lease Buyout Work?

A lease buyout is when a person who is leasing the vehicle purchases it at the end of the lease term or, in some cases, before the end of the lease. You can buy the vehicle based on the lease contract’s agreed-upon price. Known as the residual value, it is typically a percentage of the manufacturer’s suggested retail price, with some additional fees.

Keep in mind that not all lease agreements come with a buyout option. So, ask your lessor beforehand.

What is Early Lease Buyout

As mentioned earlier, some lessors allow you to buy out the lease before the agreement ends. Early car lease buyout loans make sense if:

• You’ve exceeded your car’s mileage limits and are concerned about potential penalties.
• Your car was involved in a major accident and sustained extensive damage. An early lease buyout can save you from thousands of dollars in penalties.

Many lessors impose additional fees for early buyouts. So, do the math, and make sure you’re not paying additional amounts.

What is Lease-End Buyout

A RefiJet lease-end buyout is pretty common. It makes sense if:

• You’ve invested in your car’s maintenance.
• You’re worried about mileage cap fees.
• The buyout price is less than the car’s market value.

Suppose your lease buyout amount is $12,000, and the car’s market value is $15,000. In this situation, buying out your lease will save you $3,000, a deal worth considering.

Refinancing Your Lease Into an Auto Loan

Once you’ve decided to buy out your car’s lease, you have two options: You can make a large balloon payment or turn your lease into an auto loan. With the latter, you have the opportunity to pay the loan over time and simplify ownership.

Steps for Lease Buyout

Buying out a car lease is easier than you’d think. Follow these steps:

• Talk to your lessor. Ask them to share any necessary information about additional fees, eligibility criteria, and potential penalties.
• Do the math. Factor in all the expenses, so you don’t end up paying more than what your vehicle is worth.
• Choose a financing option. Do you want to make an upfront payment or convert your lease buyout amount into an auto loan? Some lenders also offer additional finance options for low-risk borrowers.
• Become a car owner. After completing all the necessary steps, you can take possession of your vehicle.

Conclusion