Can You Finance a Car Loan For a Lease Buyout?
Can You Finance a Car Loan For a Lease Buyout?
Posted on August 26, 2022
What’s a car lease buyout? Are they a good idea? Can you use a car loan for a lease buyout? These are all questions we were asked the other day by a client. It isn’t something we have covered much so far, so we are discussing it today.
We asked our Simcoe auto loans team to explain all you need to know about financing a car loan for a lease buyout.
Car lease buyouts
A car lease buyout is exactly what it sounds like. Your opportunity to buy the car you were just leasing. It would typically happen at the end of a lease, just before it’s time to hand the car back.
The leasing company or dealership would make the offer at a given price and it’s up to you to decide whether to buy the car or get another lease.
Car lease buyouts are common on many leases. When you first sign up for the lease, you’ll see a residual value in the paperwork. This is how much the leasing company estimates the car will be worth at the end of the lease.
This is usually just a guide. The offer at the end of the lease will be the price you would be expected to pay.
Are car lease buyouts a good idea?
Car lease buyouts can be a good idea if you want to buy the car and the price is fair.
Presumably, you’re leasing for a specific reason. You like driving new cars, leases are cheaper or something else. If that changes and you like the car enough to buy, it can be a good idea.
Much depends on the price being asked. If the price is fair, usually slightly lower than market rate, it can be a good idea.
There is also the question of end of lease fees to consider. If you know you’re in for high fees or excess mileage fees, it can be even more of a good idea. Especially if the price is lower than market rate.
Check the asking price against Carfax, Kelley Blue Book, Auto Trader and anywhere else that sells cars. Make sure to check like for like, same make, model, trim, year and mileage to get an average.
Then you can make an informed decision.
Can you use an auto loan for a lease buyout?
You can use an auto loan for a lease buyout. Most leasing companies and the majority of dealerships who lease cars will accept payment using an auto loan.
There is a bit of paperwork to take care of but it’s a straightforward process.
As long as you have a good credit score and can afford the loan payments, you should get the loan.
Just make sure to get a good deal on the loan, that you know exactly what you’re getting into and can afford it and you’ll be fine!
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