Leasing a car is an interesting route compared to buying one.
Essentially, you’re renting your automobile from the dealer, which unfortunately means you have to keep that car in mint condition.
Of course, for many, the benefit of leasing comes in the ability to trade-in for a new model much sooner than you could had you purchased the car.
That’s because your lease contract will ultimately come to an end, much like an apartment lease would.
With that end comes a struggle everyone who leases knows: do you choose to buy your car or opt to trade in for a new one?
Like any decision you make, there are pros and cons to each option, which is why it’s important to consider both choices.
Here are some things to consider when deciding whether or not to purchase your car at the end of its lease.
What Will You Pay?
Guessing what a car will be valued at a couple years after production isn’t an exact science, and sometimes, it’s a value dealers and companies get wrong. If that’s the case, you may want to consider purchasing your vehicle.
Start by taking a good look at your contract and the purchase option price, then figure out the car’s market value. Is the price you’d pay for the car less than what it’s worth? If so, buying your car would definitely be worthwhile. Don’t forget to figure in the purchase-option fee when calculating this figure.
Furthermore, although this is rare, if your car’s market value is less than the buy-out price, you may be in the position to negotiate with the dealer, which means you could walk away paying a lot less than you would if you bought a new car.
The opposite could happen, too. If, due to the car’s value, you’re not in a position to save money, you may want to consider moving on.
What Kind of Shape is the Car In?
As I mentioned earlier, whenever you lease a car, you become responsible for taking great car of the vehicle. Everything from mileage, to scrapes, dings and paint chips will factor into how much you pay to purchase the car and how much you’d pay to not purchase the car.
When you enter into a lease, you’re only allotted so many miles per year, and every mile you go over is going to cost you. Of course, you’ll avoid any fee by opting to buy the car.
Moreover, if you’ve received a fair number of dings and scratches while the car was in your possession, you’ll face a penalty fee from the company. Again, you can avoid these fees by choosing to purchase your car instead.
However, maybe you’ve taken pristine care of the car, in which case, buying your car seems like a great option. If you know it’s in great shape and condition, and if the price is right, buying could be worth it.
This is especially the case if you’ve kept the miles low, as mileage lower than the allotted amount could mean the car is worth far more than the residual value.Thinking about buying your leased car at the end of your lease? Consider these facts Click To Tweet
Consider the Convenience of it
No one can argue with the convenience purchasing your car at the end of its lease has. One of the most stressful parts of buying a car can be negotiating the price.
As mentioned, most of the time you won’t have room to negotiate the price of your leased car, so if it’s a price you are okay with, purchase your vehicle and save yourself the stress of negotiation.
Furthermore, car shopping can be a fun experience, but it’s also extremely time consuming and sometimes frustrating. If you don’t have the time to truly commit to shopping for a car, you could end up spending more than you’d hoped out of sheer rush to get the purchase made. Hence why buying your car could end up being the better option.
To be clear, I’m not saying to consider this option by itself. You should have other good reasons for why purchasing your car is the best decision.
Consider the Make and Model of the Car
Another major factor in your decision process should be the car itself. Consider the popularity and demand of your vehicle. If you have a highly desirable car, whether it be for its design or fuel efficiency, the car might end up being worth more than its residual value. In that case, buying out your lease is a great choice.
More than that, the beauty of leasing a car is that you get to try a model out without making a full commitment to it. If you decide it’s a car you absolutely love, why wouldn’t you make the purchase?
On the other hand, if your car has been malfunctioning or if you’ve had to take it into the shop multiple times since driving it, you may want to reconsider. Your car is usually under warranty while you’re still in the lease period, however, once the lease ends, so might the warranty.
Unfortunately, a car that’s needed a multitude of repairs isn’t indicative of a good long-term vehicle, which means it could cost you over its lifetime. If that’s the case, purchasing that car might be a bad use of money.
Overall, think about how well the car has run and whether or not you truly love it.
A car is a major purchase, which is why deciding whether or not to purchase yours upon the end of its lease can be a struggle. The important thing to remember is to consider every aspect of the situation.
Do your research, consider your financial situation, and weigh the pros and cons of each decision. In the end, take every factor into consideration and make the decision that best works for your life and finances.
Do you have a car lease? Have you ever purchased it at the end of the lease? If so, what made you make that decision?