Buy a Car at the End of Your Lease

The first thing you need to know, is the cost of buying out your lease. Study the fine print of your contract and search for the "purchase option price". This price is set by the leasing company and generally consists of the residual value of the car at lease end plus a purchase-option fee ranging from $300 to $500. When you signed on the dotted line, your monthly lease payments were derived from the difference of the vehicle's sticker price and its estimated value at lease end with a monthly financing fee tacked on for good measure. This estimated value of the car at the end of the lease is termed in leasing jargon as "residual value". It is the anticipated depreciation - or loss in value - of the vehicle across the scheduled lease time period. For instance, a car with a sticker price of $40,000 and a 50% residual value will be worth an estimated $20,000 at the end of the lease.

Now that you know the cost of buying out your lease, you need to find out the real value of your car or truck, also termed "market price", of your vehicle. How much does your car retail for in the marketplace? To nail down a dependable, solid appraisal you need to do a little research. Check out the price of the vehicles, with like mileage and conditions, with a couple of auto-dealers. Use online pricing websites, such as Cars.com, Edmunds.com and Kelly Blue Book for detailed pricing information. Gleaning price data from several sources should present a fair estimate of your vehicle's retail value.

Now all you have to do is compare the buy-out value with your estimated value. If the residual value is less than the actual retail value, than you're a winner. Unfortunately, there is a good probability of a car coming off a lease a little on the high side. Don't despair, leasing companies know that residual values on their vehicles are greater than their market value, so they are always on the look out for good offers. You can knock down the price of your leased car with some smooth negotiating maneuvers. Submit a price that is below your price point and negotiate heavily until you land near your price.