How to Calculate a Lease Buyout

car finance paperwork with tiny car

So, you’ve leased a car to drive around Freehold and have come to the conclusion that you want to buy it at the end of your lease term. Well, we here at Galaxy Toyota can help you out! It can be difficult to figure out how to calculate a lease buyout, but we’ve made the process simple with this short guide. Keep reading to find out how to calculate a car lease buyout, and be sure to contact us if you have any questions!

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Is it Worth it to Buy Out Your Lease?

Probably the easiest way to calculate the majority of the cost to buyout of your car lease is to check your lease plan. Look for a “buyout amount” or “payoff amount” that will be listed on your monthly leasing statement.

This buyout amount is calculated by adding up the residual value of your vehicle at the beginning of the lease, the total remaining payments, and possibly a car purchase fee (depending on the leasing company.)

If you don’t see this value listed anywhere, or if you prefer to do your own research on how to calculate your lease buyout instead, follow these steps:

  1. Determine the residual value of the vehicle.
    This information will be found in your lease contract, as it was calculated at the beginning of the lease. This value is the estimated future value of the vehicle by the time the lease contract ends.
  2. Determine the actual value of the vehicle.
    Your car may have decreased in value from when the lease began, due to unavoidable depreciation, or any wear and tear from driving. Of course, it also may not have decreased in value as much as you’d think, especially if your driving around Toms River has been less than the average 12,000 miles per year. Use a service like our online Value Your Trade tool to assess the current market value of your car.
  3. Compare the residual value and the actual value.
    If the actual value of your vehicle is higher than the residual value from your lease contract, then purchasing your vehicle could be a good deal. If not, you should negotiate with the dealer on the purchase price.
  4. Account for license and registration fees.
    If you buy the car that you’ve been leasing, that means that certain costs of ownership are transferred from the leasing company to you. This includes title transfer costs, licensing, and registration fees. You can learn more about the fees on the NJ MVC website. Make sure to also check with your leasing company for any of their fees.
  5. Account for sales tax
    There is a local sales tax rate when you buy out your vehicle, which you can also find on the MVC site.

What’s Better? Lease-End Buyouts or Early Lease Buyouts?

Lease-End Buyouts: Once you’re at or near the end of your lease, you can likely negotiate a better buyout. This is because the dealer may think you are planning on selling it back to them. This will cause them to offer you a better deal to keep the vehicle.

Early Lease Buyout: It’s much harder to negotiate the purchase price of your car lease buyout if you are trying to end your lease agreement early. Whether it’s because of too much wear and tear on the vehicle or a danger of exceeding the mileage limits from too many trips out of Long Branch, the dealer is aware of their extra leverage when you try to prematurely end your lease. You can still do it, but you’ll have less wiggle room.

Count on Galaxy Toyota for the Best Auto Tips

If after reading this guide, you still have questions about how to calculate a lease buyout, lease buyout loans, or any other questions concerning car loans, auto loan interest rates, or otherwise, contact our finance center. You can also use our handy payment calculator tool to help plan your next vehicle purchase or buyout!

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