INTRODUCTION
You did it – you made it through your car lease term! But now that your lease is ending, what should you do next? Don’t stress – we’ve got you covered. This comprehensive guide will walk you through all your end-of-lease options, fees to watch for, and tips to make your transition smooth.
Table of Contents
Understanding Your Lease End Options
When your car lease ends, you have several options to consider for your next steps. Being aware of the possibilities can help you make the best choice for your situation.
Return the Leased Vehicle
The most common option when your car lease concludes is to simply return the car to the originating dealership. This cleanly ends your leasing obligations. However, be prepared for potential extra fees like:
- Excess mileage charges if you drove over the limit
- Wear and tear fees for any damage beyond normal use
- Disposition or lease turn-in fees
- Any unpaid late payments or tickets
Review your lease contract thoroughly to understand expected costs when turning in your car. Make any needed repairs beforehand to minimize surprising fees.
Buy Out the Car Lease
Many lease agreements include an option to purchase the leased car at the end of the term for a set residual value amount. Buying your car at lease end could save you money compared to the current market value – if the residual value was set high when your lease began.
Downsides are you then own a used car, and it keeps depreciating as it continues aging. You also may need financing for the buyout.
Lease or Buy a New Car
Continuing your relationship by leasing or buying another car from the same dealership is a convenient option taken by many at lease end. The dealer will often provide loyalty incentives or discounts to make a new deal appealing.
You avoid turn-in fees on your previous lease by starting fresh, but still must settle any excess mileage or wear and tear balances.
Extend the Current Lease
If available, some leases can be extended month-to-month for a short term grace period. This gives you extra time to weigh options or wait for the ideal new car.
Extensions maintain your access to the current car temporarily, but you pay the same ongoing monthly cost. Review lease extension eligibility with your dealer.
Knowing your end-of-lease possibilities puts you in control. Choose what makes the most sense financially and logistically.
Be Aware of Potential Extra Fees
When turning in your leased car at the end of the term, be prepared for additional fees beyond your normal monthly payments. Understanding these can help avoid surprises and budget effectively.
Excess Mileage Fees
Most leases include an annual mileage allowance, usually between 10,000-15,000 miles per year. Going over this limit results in excess mileage fees typically charged at 10-20 cents per mile driven over the allowance.
Carefully review your contracted mileage cap to avoid exceeding it. The overage charges can add up, so know your limit before lease end.
Wear and Tear Fees
Normal wear and tear on leased vehicles is expected. But excessive damage can lead to fees during inspection for items like:
- Major dents, scratches, or stained upholstery
- Chipped or cracked glass
- Missing parts or accessories
- Significant tire wear
Fix or replace anything beyond regular use before turning in the car to avoid surprising charges.
Unpaid Payments and Fees
Double check your full payment and fee history to ensure everything is settled. Any past due monthly payments, late fees, traffic tickets, or other outstanding lease balances must be taken care of.
Review your contract and statements to avoid overlooked charges complicating the return.
Early Termination Fees
Ending your lease before the full term is up often incurs early termination fees. Expect to pay the remaining monthly payments per the original contract plus penalty fees for early cancellation.
Knowledge of all possible extra fees helps you budget for a smooth lease return. Settling outstanding balances also keeps things simple when turning in your car.
Should You Buy Out Your Lease?
When your car lease ends, you may be wondering if buying out the lease is the right move. There are some advantages, but also important downsides to consider.
Potential Benefits of Buying Out Your Lease
- May be cheaper than current market value if the residual buyout value was set high when leasing began.
- No more mileage restrictions or overage fees to worry about once you own the car.
- Skip the hassle of shopping for another used car if you’re happy with your current leased vehicle.
Key Factors to Consider Before Buying Out
- Compare the preset residual buyout price to the car’s current actual market value. This will determine if buying it out saves money or not.
- Have the car thoroughly inspected and review full maintenance records to assess condition.
- Check current auto loan rates and get pre-approved financing if needed to buy out the lease, as rates have been rising.
Possible Downsides of Buying Out Your Leased Car
- Sales tax often applies to lease buyouts in some states, potentially increasing cost.
- The ideal loan term is shorter since the car has already aged 3+ years under the lease. Avoid very long loans.
- You take on ownership of a used car versus having access to newer cars through continued leasing.
- The car will continue depreciating in value as it ages, while leases provide newer cars.
Carefully weighing the pros and cons helps determine if buying out your lease makes solid financial sense. Consider the numbers, condition, and your goals.
Other End of Lease Strategies
Along with the core options, here are some creative tips and strategies to consider at your car lease end:
Negotiate Your Lease Turn-In
Use your desire to return the leased vehicle as a bargaining chip when negotiating your next car purchase or lease. Turning the car in to the same brand often waives the disposition fee.
Consider Selling to a Third Party
If substantial equity exists between the car’s market value and your residual buyout amount, consider selling it to a private party or dealer. Pay off the lease, then keep the extra cash difference.
Extend the Lease if Needed
Most leases can be extended month-to-month for a short term grace period if you need more time to decide your next move. This maintains your access to the current car temporarily.
Carefully Review All Contract Terms
Reread your full lease agreement to avoid surprise restrictions. End-of-lease policies vary, and some car brands limit flexibility. Make sure you understand all fees and options.
Line Up Your Next Car First
Shop for your next car before turning in your lease so you can negotiate the best deal. Use lease-end as an opportunity to get loyalty discounts.
Address Wear and Tear Issues
Fix minor damage like door dings or stained seats to avoid lease-end fees and maximize your return or trade-in value.
Getting creative with end-of-lease strategies can help you save the most money, whether you return, buy out, or sell the car.
Conclusion
In summary, being informed on your end-of-lease options, potential fees, and negotiated values is key to making the best financial decision when your car lease concludes.
Review your contract thoroughly to understand residual values, mileage limits, wear and tear policies, and any purchase or extension provisions. Consider both pros and cons of buying out your lease versus returning the car.
Creative strategies like selling to a third party or negotiating your return can maximize savings. Address any needed repairs and clean the car inside and out.
If opting to turn in your lease, fix minor damage, gather all accessories, and be prepared to pay applicable fees. With the right preparation, you can transition smoothly into your next exciting car. Careful planning makes your lease end process a breeze.