What is a Lease Buyout?

Leasing is a great option for many San Francisco drivers looking at new vehicles. Yet some buyers are ready to purchase their leased vehicle. When your lease is approaching its expiration date, a common choice many make is to return the vehicle and settle the remaining balance. Another option, however, is to negotiate a car lease buyout. You might be asking, “What is a lease buyout?” and “How does a lease buyout work?”

In short, a lease buyout is when a dealership allows you to purchase a vehicle at or before the end of a lease contract for the price of its remaining value. There are two different types of car lease buyout options to choose from around Oakland. Beyond how does a lease buyout work, We’ll provide a proper lease buyout definition and explore what’s available to you. Learn more with Cadillac Of South San Francisco below and call us at (650) 539-0346 with any questions!

Option 1: Lease-End Buyout

Let’s start with a proper lease buyout definition of what’s available as you’re approaching the end of your lease. The most common option is called a lease-end buyout, and it requires you to pay what the vehicle is expected to be worth by the end of the lease period. Typically, this price was confirmed by both parties before your lease agreement was signed. This is a great choice if:

• You’re happy with the vehicle
• There have been little to no repairs since you’ve had the car
• There’s no other vehicle, at a similar price point, that you’d like better
• You can get a good interest rate to finance the buyout price

Another perk is knowing the condition and history of the vehicle you’ve been leasing, unlike when purchasing a different car.

Option 2: Early Lease Buyout

The second car lease buyout option is called an early lease buyout, which is when you choose to purchase the vehicle before the end of the lease. It’s important to note that not all lease contracts offer this, so check the lease agreement to determine if it’s truly an option for you. You’ll also want to do your own research and consider the vehicle’s history to see if it’s worth the investment. The price will be determined by: 

• The lease-end residual value on your original contract
• The amount you still owe on the lease
• If the vehicle has depreciated quicker and is below market value, you might have to pay the difference

In general, Colma and San Mateo buyers consider this buyout option when they are concerned about lease penalties like going over mileage, not maintaining scheduled services, or damage to the interior or exterior of the vehicle. 

Learn More About Lease Buyout Definitions at Cadillac Of South San Francisco

Now that you know what is a lease buyout and how does a lease buyout work, you can talk with our finance team to determine which option is best for you! If you’d like to determine your car’s overall health, feel free to schedule an appointment with our Colma service department!