What Is a Lease Buyout Loan? If you really love your leased car and can’t bear parting ways with it, purchasing it once the lease is over may be the best solution for you. A lease buyout loan could be the perfect financial step that will help turn this dream into a reality.
A lease buyout loan is a car loan that lenders offer to people whose lease deadlines are coming to an end. It can be the best way to finance the CA residual value (the remaining cost). Just like other car loans, you will have to pay installments monthly to cover the car’s estimated value, interest, and fees.
How Does It Work?
Just so you know, a car lease buyout is very similar to purchasing a used car. Only that, this time you have already been driving the car for years. Before the lease reaches its end, you will be contacted by the leasing company to check the options available. You will be asked to either walk away from the car or simply turn the vehicle over to the leasing company at the end of the lease contract. Alternatively, you can buy the car with cash. You will also be provided with the option to purchase the vehicle with a lease buyout loan.
However, before the leasing company reaches out to you, you will have to do your own research on the leasing agreement that you signed. The signed agreement will contain the residual value amount. That amount is what the company says the car value will be in 3 years. Note: Before you consider going for a lease buyout loan, make sure you check that purchasing a vehicle is an option offered in your lease agreement at the end of the term. The reason is that it is not always an option.
How Can I Get a Lease Buyout Loan?
Just so you know, online lenders, credit unions, banks, and finance companies offer these loans. It is very important for you to shop around so you can compare different terms and annual percentage rates. The loan you are preapproved for will be based on your credit score, loan term, income, expenses, APR, and the value of the car as a used vehicle. However, keep in mind that the interest rate and fees of this loan will be higher than those of a new car loan. If you decide on this, here is the process to follow:
Review Your Leasing Agreement
In addition to the normal rules on the contract, it will also contain when a buyout is allowed. It will specify where you can purchase the car three months closer or out of the lease end date.
Research on the Current Market Value of the Car
Ensure that you know the market value of the car and the residual value. This will go a long way in helping you negotiate both your purchase price and the preapproved loan.
Call the Leasing Company
Inform the leasing company that you want to purchase the car for the value listed in the leasing agreement contract.
Compare Lease-Buyout Loan Options
Start with your credit union or bank and check if they offer this loan. Although not all financial institutions offer these loans, you can check online for options. Compare options from credit unions, banks, or online lenders to find the best one for you.
Sign the Loan Offer
Now, you can enter into negotiations with your leasing company. Make sure you agree on a good price for the car that is acceptable to you. Finally, sign the contract or agreement.
Note: The lending institution that provides the loan will have the title as collateral on the loan. This is very typical for both used and new car loans.
What Should I Consider Before Buying Out a Car Lease Buyout Loan?
These are different factors that will contribute to the decision when you want to buy out your lease. Here are a few:
- Make sure you like the car.
- Ensure that you are getting a good deal on the residual value of the car.
- Ensure that you have passed the mileage limits for the car. And you are faced with paying the agreed-upon penalty.
- Make sure you have exceeded the amount of wear and tear. And you will have to pay for the expensive body repairs and paint.
When you purchase the car at the end of the agreement, you won’t have to worry about the expenses. Such as exceeding the amount of wear and tear restrictions or mileage limit because the vehicle now belongs to you.
Top Lease Buyout Loan Companies
Here are some of the financial institutions where you can purchase these loans:
- RefiJet
- Gravity Lending
- RateGenius
- Tresl
- MyAutoloan
- AutoPay
- LightStream
- Ally
Visit these financial institutions today and compare their rates. You will have to provide certain information, like your credit score, financial history, and more, to get the right rate. This loan is a good idea for you if you love your vehicle and won’t like to part ways with it.
Conclusion
If you find it very hard to go through the buying-out-of lease process, then you can speak to your lease provider. They will help you find out how you can proceed with the process. The company will help you out and discuss the buyout terms with you. If you are not okay with the rate, you can just negotiate.
The negotiating process is very similar to purchasing a used car. If the car is difficult to sell, it will be very easy to negotiate for one that is sought after by customers. Get a lease buyout loan today and prevent parting ways with your beloved leased car. However, if you feel it is not the best option for you, you can buy a used version of the model. This could help you avoid the buyout loan fees.