What Are My Options at the End of My Lease?
Your leased vehicle has held up well, and you’re pretty comfortable in it. All your radio stations and seat adjustments are set the way you want, and you like your ride.
But now you’re at the end of your lease, and you’ve got decisions to make. Do you return it or do you buy it?
What you do depends on your personal situation. Leasing generally is better if you:
Don't drive a lot. As you know, when you contract for a lease, you have to choose a mileage plan. Estimate carefully because going over the miles in your contract can result in fees at the end of the lease.
Want to drive a newer car more often. Because car leases are short term, you can be in a new vehicle more often.
Want to keep your monthly payments low. Leasing generally means lower monthly payments than buying, but not always.
If you’d like to continue leasing, your local dealership can help you with a lease on a new vehicle.
If you’re already leasing, you’re probably familiar with the term “excess wear and mileage.” At the end of your lease, you’re responsible for damage to the vehicle above what’s considered “reasonable” and for miles that exceed your contract. It’s a good idea when you first lease the vehicle to ask your dealer if there are waiver contracts that cover excess wear.
These are the items that GM Financial considers beyond reasonable:
Four or more dings per panel
One dent more than 4 inches or one scratch equal to or more than 6 inches per panel
Permanent carpet stains
Upholstery tears more than ½ inch
Cracked glass equal to or more than ½ inch in diameter or spider cracks
Broken parts or missing equipment, including key fobs
Tires not the same size or specifications of the original equipment
Tire tread under 4/32-inch
Wheels with scratches more than 3 inches
Mechanical defects
Instrument panel warning lights or messages illuminated
Those may sound minor, but they can add up. More information can be found in our Lease-End guides.
In addition, most leases require the driver to maintain the vehicle as recommended by the manufacturer over the life of the lease.
Whether you continue to lease or decide to buy, you’ll want to check off the following when turning the vehicle in or getting a lease-end inspection to get the highest value:
Clean the vehicle inside and out before it’s inspected
If the damage charges seem excessive, contact your financing company
If repairs are necessary, keep receipts
There are instances when buying your leased car may fit you best, and there are a few ways to do it.
Dealerships will sometimes buy your leased vehicle, knowing they can turn around and sell it, especially if the car is in good condition with low mileage. If your leased vehicle is worth more than the amount of your lease buyout, a dealership may be willing to negotiate, and you can use the trade-in value to purchase a new car or obtain a new lease. Your financing company may also waive any end-of-lease charges if you buy the car (see your lease agreement for details).
You will want to visit a site like Kelley Blue Book to get an idea of the value of your car. If the current market value is greater than the residual value that was projected at the start of the lease, you may benefit from buying the vehicle and keeping or reselling it. The residual value is the estimated end-of-term value of your vehicle that’s established at the beginning of the lease and used to calculate the monthly lease payment.
The biggest difference between leasing and buying is that with buying, when you’ve paid off your contract, you get the title to the vehicle. People who like to keep their cars for a long time prefer knowing that they have trade-in value after it’s paid off.
With a lease, you’re making monthly payments for a contracted number of months. Instead of paying down a loan, you are paying for the depreciation in the value of the vehicle during the term of the lease.
Once you’ve considered all the options and pros and cons, if buying seems like it’s right for you at this point, consider the market value of your current vehicle. If you’ve taken good care of it and the mileage is low, it may have considerable value even if you were to buyout the lease on it now and sell it later. And compared to new car prices, which now average upwards of $45,000, a lease buyout may make more financial sense.
But you may not have done that before and have no idea where to start. Not all lenders offer lease buyout financing, but many do. If you've decided you'd like to purchase your leased vehicle, you've got options. You can visit your dealer to see what deals they have or there's an easy way to apply for a lease buyout from the comfort of your couch. It’s called ModeSM. The process is completed online, and it’s by GM Financial, so it’s financing you can trust.
We have a few advantages at Mode that you might want to consider when comparing lenders:
No application fees1
Friendly and knowledgeable customer service team
Fast and easy online application process
60 days until your first payment (in states where that’s allowed)
All our credit and funding professionals are in-house, so you’ll have an answer on your application in less than 24 hours
Here are some of the things we look for (hint: you don’t have to have perfect credit):
Monthly minimum income of $2,000
FICO score > 450
Vehicle 9 years old or newer
Less than 100,000 miles on the vehicle
So, if you're approaching the end of your lease and would like to explore a lease buyout without leaving your house, check out getmode.com today.
1You will not be charged application or processing fees by Mode. Depending on your state, title and registration fees may apply.
By Julie Powell, GM Financial