Considering a Lease Buyout? Here Are Four Things You Should Know!
If you’ve been driving a leased vehicle and you’re nearing the end of your lease, a lease buyout could be a great option! Now you may be asking, “but how do I know if it is a good option for me?” Well, everyone’s situation is different, so here are a few things you should consider before you make that decision:
Know your wants and needs
If you love the vehicle you’re driving and can’t see yourself in anything else, there can be significant advantages of retaining the vehicle you’re already familiar with, including first-hand knowledge of your vehicle’s maintenance record and your own comfort level with the various features and amenities. Although, you should be sure to consider any potential life changes on the horizon that could affect your future needs! If you are expecting a new addition to the family, have teenagers who will be driving soon, or will be taking on a new job that would require a longer commute, then you may need to consider turning in your lease and getting a different vehicle!
Know the terms of your lease agreement
Does your lease agreement have a disposition fee, and if so, what are the criteria for that fee to be imposed? Are you subject to mileage overage fees if you’ve gone over the allowable number of miles? Does your vehicle have excessive wear fees due to any “unique” driving habits that you may have? Does your lease contract even allow for an end-of-lease buyout? Be sure to carefully review your lease agreement for all of these important details, as they are crucial factors when deciding whether or not to buy your vehicle at lease-end.
Know what your vehicle is worth
Once you have determined what the lease buyout amount will be—normally established in your lease agreement and is based on the forecasted residual value at the end of your lease—you need to find out your vehicle’s market value. An estimated market value can be found online from sites such as Kelley Blue Book (www.kbb.com) or Edmunds (www.edmunds.com). If the lease buyout amount is lower than or comparable to what you could buy a similar vehicle from the used car market, then a lease buyout could very well be a financially smart decision!
Know your budget requirements
Leasing a vehicle has been a popular option because it provided the opportunity to drive the latest models without the long-term commitment of owning a vehicle or the oftentimes higher payment of financing the full purchase of a vehicle. Unfortunately, even though you may be comfortable with your current lease payment, lease terms aren’t as attractive as they once were, so your monthly car payment could be going up regardless of whether you take on a new lease or finance a lease buyout. Reviewing your budget ahead of time is the best way to be prepared for making an informed decision when comparing the various lease and financing options available to you.
Do you still have questions, or are you ready to get started on your lease buyout? Please contact one of Downriver CU’s Member Services Representatives by calling 313-386-2200, Option 4, and they would be happy to discuss your financing options!
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