How Do I Go From Leasing to Buying?
You’re at the end of your lease. You’ve done some research, and you’re leaning toward a lease buyout. Now what?
There are some basic things to know about leasing versus purchasing a vehicle. First, you’ll be making payments to a lender toward owning the car at the end of your contract, which could give you trade-in value on your next vehicle.
According to Consumer Reports, over the long run, buying a vehicle and keeping it until it isn’t economical to repair is the cheapest way to drive. That’s because with a lease, you’re paying for a car when it’s most rapidly depreciating and, depending on how well you take care of it, you may have to pay for excess wear and mileage at the end of the lease.
Some lease contracts have a buyout option that allows you to buy the car either during the term of the lease or at the end. Buying out your vehicle lease can be a great way to know exactly what you’re getting because you know who’s been driving it — you.
There’s often an early termination fee if you want to return the vehicle before the lease is up. If that’s the case, it might make more sense to wait until the end of the lease to make your move.
Next steps?
So, if it seems like a lease buyout might be the best way to go, your car’s valuation will help determine what kind of deal you get. Here are the various valuation types on leased vehicles:
You can find out the “market” value of your vehicle through an independent site like Kelley Blue Book.
The “residual value” listed in your contract was determined at the beginning of your lease and represents the amount the lease company expects the vehicle to be worth at the end of the lease.
The “buyout” or “payoff” amount includes the residual value of your vehicle, the total remaining payments and possibly a car purchase fee (to prep the car for resale).
The next decision is which lender to go with to finance the buyout.
Not all lenders offer lease buyouts, but many do. For GM Financial lease customers1 who want to purchase their vehicle, there’s an easy way to do so 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.
There are a few advantages at Mode that you might want to consider when comparing lenders:
No application fees2
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 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 Mode requires (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, go to getmode.com and let's see if we can get you some terms you'll like.
1 At this time, only GM Financial lease customers can apply to finance a lease buyout with Mode. Other lessees may be able to apply in the future.
2 You will not be charged application or processing fees by Mode. Depending on your state, title and registration fees may apply.