How to Calculate a Lease Buyout

If your lease is expiring soon, you may be wondering about what your options are. For starters, you can terminate your contract, swap out the vehicle, or renew your lease, but you can also finance the remaining value with the intention of ownership. If you plan on buying out your lease, you’ll need to figure out whether it’s cost-effective. Take a moment to learn more about how to calculate a car lease buyout, so you can determine whether it’s worth it for your purposes. Then, once you’re done reading, reach out to a Five Star Automotive Group finance center near you for assistance! 

Determining Whether a Lease Buyout is Worth It 

Following our tips on how to calculate a car lease buyout will help you determine whether this move is sensible for your needs and budget. The first step of how to calculate a lease buyout is to look at your monthly lease statement. 

Most of these statements feature a “Buyout Amount” or “Payoff Amount” section. This section tells you what the residual value of your vehicle was at the start of your lease. It also indicates how many payments remain, how much the vehicle is worth given the payments you’ve made, and what a potential car purchase fee would be. If you can’t find this information on your lease statement, follow these steps for how to calculate a car lease buyout: 

1. Find the Starting Residual Value: Your statement may not feature a buyout amount, but it definitely states the estimated amount the vehicle is worth, given the payments you’ve made towards the residual value first calculated at the beginning of your lease. 
2. Determine Current Value: Your car has naturally depreciated since you first began leasing it due to wear and tear. That said, if you’ve been driving less than 12,000 miles a year, it probably hasn’t depreciated as much as you’re anticipating. Use the Kelley Blue Book trade-in value calculator to determine how much your vehicle is currently worth. 
3. Compare Residual Value and Actual Value: Compare the residual value stated on your lease agreement to the actual value you calculated using a trade-in value tool. If the actual value is higher than the residual value, then it won’t make sense to buy out your lease. 
4. Identify License and Registration Fees: If the residual value is lower than the actual value, it’s likely a good move to buy out your lease. However, make sure to factor in the costs of transferring the vehicle’s title, as well as license and registration fees. For specifics, reach out to your local DMV. 
5. Account for Sales Tax: The final step to ensuring that it’s cost-effective to buy out your lease is to check your local sales tax and factor it into the anticipated costs of purchasing the vehicle. 

Early Lease Buyouts vs. Lease-End Buyouts 

One last thing to consider is whether you’re planning on buying out your lease at the end of the agreement or prior to the expiration date. If you’re near the end of the agreement, you may be able to negotiate a better deal. Also, if you can indicate that you plan on selling the vehicle back to them one day, you might just sweeten the pot! While early lease buyouts are an option as well, you need to make sure that any fees associated with breaking your lease agreement remain cost-effective. 

Need Help with How to Calculate a Car Lease Buyout?

You’ve read our guide about how to calculate a lease buyout, but if you have questions or want to leave this job to the experts, reach out to a Five Star Automotive Group dealership near you for assistance. We have locations in Ohio, Indiana, Georgia, South Carolina, Tennessee, and Alabama! While you’re here, however, learn about the reasons to work with Five Star Automotive Group dealerships, and read our guide on whether you can lease a used car!