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Dear Car Talk: What can you tell me about buying out a lease? — Steve
If you mean buying a car outright at the end of your lease agreement, that’s easy. You simply get in touch with the leasing company, tell them you want to buy the car (the end-of-lease price was pre-set when you originally leased the car). They send you the paperwork. You send them a check. They send you the title. You pay the taxes and register it, and it’s your car.
But if you mean buying out a lease before the leasing period is over (i.e., getting out of your lease early), that’s trickier. A lease is a legal contract. If you just go back to the dealership, they’ll want everything that’s owed them for the full life of the lease.
Here’s how it would work: Let’s say you leased an Accord last year, worth $35,000 new. You agreed to pay $10,000 in monthly lease payments over three years. So, the buyout price at the end of the lease was pre-set at $25,000.
You walk back in a year and a half into the lease, and what happens? They can demand $25,000 — the value they’re expecting at the end of your lease — plus the $5,000 in lease payments you haven’t made yet. And if they believe they can only sell the car for, say, $27,000 right now, you’re going to owe them $3,000 to get out of the lease.
At that point, you might as well keep the car, right? Since you’re paying for it anyway. A more cost-effective (and legal) way of exiting a lease early is to find someone who’s willing to take over your lease.
That could be someone you know personally, or you could try a lease takeover site (like Swapalease or LeaseBusters) that helps match you with a potential lease-take-er-over-er.
The leasing company would have to approve the new lessee, based on their credit history, and there’d be a “lease transfer” fee. Because, of course, there would be.
But paying $500 in fees is likely to be cheaper than taking the car back to the dealer. And probably about the same as what your cousin Vinny will charge to drive it into a cement wall for you.
Got a question about cars? Write to Ray in care of King Features, 300 W. 57th St., 41st Floor, New York, NY 10019, or email by visiting the Car Talk website at www.cartalk.com.