How to Calculate a Lease Buyout

Man and Woman Signing Contract

It’s not uncommon for Waterford drivers who’ve leased a Hyundai from Old Saybrook Hyundai to decide they’d like to keep it for longer than the lease term. When that happens they need to know how to calculate a lease buyout. Our finance department is here to help you decide if a lease buyout is right for you, and the best time to do it. We’ll also show you how to calculate a car lease buyout.

Is a Lease Buyout Right for You?

When you get your monthly lease statement you’ll likely see a number labeled either Buyout Amount or Payoff Amount. This buyout amount includes the residual value of your vehicle at the start of the lease, the total remaining payments, and a car purchase fee if your leasing company includes one. If you don’t have this value listed anywhere, you can determine your buyout amount by doing these calculations:

  1. Determine the residual value of the vehicle.
    This value is the estimated future value of the vehicle by the time the lease contract ends. It was calculated at the beginning of the lease and should be in your initial lease paperwork.
  2. Determine the actual value of the vehicle.
    Cars depreciate in value. It’s unavoidable. The value of your car in the lease paperwork is an estimate. If you’ve driven less than 12,000 a year in Madison your car might not have depreciated as much as estimated. Resources like Kelley Blue Book can give you an updated estimate of your leased vehicle’s market value.
  3. Compare the residual value and the actual value.
    If your car’s actual value is higher than the residual value in your lease contract, purchasing the vehicle might be a good financial decision. If not you might be able to negotiate a more reasonable purchase price with the dealer.
  4. Include license and registration fees.
    Switching from leasing to owning means absorbing the ownership costs. You’ll be responsible for paying transfer costs, licensing, and registration fees. The state DMV and the leasing company will have this information available to you.
  5. Account for sales tax.
    There is a local sales tax rate in the Branford area when you buy out your lease. This information should be available through the DMV website, too.

Lease-End Buyouts vs. Early Lease Buyouts

There are two kinds of ways to do a lease buyout: at the end of your lease, or mid-lease. Here’s how to calculate a lease buyout for each option:

Lease-End Buyouts

When you’re at or near the end of your lease you’ll have a better chance of negotiating a better buyout price.

Early Lease Buyout

This option gives you the least amount of wiggle room for negotiation of the purchase price. The only reason to jump into an early lease buyout is if you’ve broken the lease’s restrictions on mileage and vehicle wear. The dealer will have more leverage because of this.

Get a Great Deal at Old Saybrook Hyundai

Whether you choose to buy or lease, you can count on Old Saybrook Hyundai to work with you on getting the best deal on your next car! Start with our car-buying tips, then contact us with any questions you have about automotive finances.

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