Question

What is car lease buyout?

A car lease buyout, also called a purchase option, is a clause written into your lease agreement that lets you buy the car at the end of the lease period.

The purchase option and buyout amount will be mentioned in the lease agreement when you first sign it. When the lease period is up, you can either buy the leased car or return it to the dealership.

If you are planning to buy a leased car, you will have to pay a minimum amount to the dealership. This cost comprises of the residual value of the car, the remainder of the lease payments, your state’s sales tax and the fees to the dealer.

You can either pay the fees in cash or take out a lease buyout loan from a bank, credit union, or online lender. Once the dealership fees and taxes are paid, the title will be transferred to you (or your lender if you financed) and the car is all yours.