Buying Your Leased Car: A Step-by-Step Guide to Auto Lease Buyouts
Find out when buying out your lease makes financial sense and steps you can take to make the process go smoothly.
Bottom Line Up Front
- A lease buyout lets you purchase your leased vehicle, usually at the end of your lease, for a price that’s set in your contract.
- Buying out your auto lease makes the most financial sense when your car’s market value is higher than the predetermined buyout price that’s in your lease agreement.
- You can pay the full amount in cash, or you can finance your auto lease buyout to spread out the cost over time.
Time to Read
8 minutes
July 15, 2025
You know exactly how your car handles on the road. You’re familiar with all its features and quirks. It’s comfortable, reliable and affordable. But as the lease term winds down, you’re faced with a decision: Should I keep driving this car, or should I hand the keys back over to the dealer?
If you’re not ready to say goodbye to a vehicle you know and love, then an auto lease buyout might be right for you. When you buy out your lease, you get to purchase the car you’ve been driving instead of returning it.
If you don’t have the cash to pay in full, an option is to finance your purchase with an auto lease buyout. This option could help you save some money while letting you keep a car you already like. You also can save time because you don’t have to start searching for a new vehicle.
What is an auto lease buyout?
An auto lease buyout means you buy the car you’ve been leasing. Your lease agreement included a predetermined estimated buyout price (also called the “residual value”) for purchasing the vehicle. You can buy out your lease at the end of the term, or possibly earlier. A lease buyout can help you keep a car you like while avoiding excess mileage or wear-and-tear fees.
Smart money tip
Before deciding on a lease buyout, compare your options and look at your finances. Consider whether leasing vs. buying a car makes sense for your budget and current situation, and run your numbers in our calculator to estimate your options.
The 5 key steps of buying out a leased car
Buying out your lease can be very straightforward, but it’s worth taking your time to make sure you’re getting a good deal.
Here’s how the process works:
STEP 1: Find your buyout price
Check your lease agreement for the residual value, which is your buyout price. You also can call your leasing company to confirm the exact amount, including any fees. Some leasing companies charge additional processing or documentation fees, and a purchase option fee, on top of the residual value. Ask for a breakdown of all costs so you can avoid surprises.
STEP 2: Look at your car’s condition and current market value
Look up your car’s current market value using resources like Kelley Blue Book® or Edmunds®. You can use your vehicle identification number (VIN) to get an accurate valuation. The model year, mileage, wear and tear, and any needed repairs are all key factors that affect the vehicle’s worth.
Be honest about any wear, as this can affect the car’s value and potentially lead to extra costs. Consider getting a professional inspection if you’re not sure about the car’s condition.
STEP 3: Compare the numbers
If your car’s market value is higher than the buyout price, you’re looking at a good deal! If the buyout amount is higher than the market value, you might want to think about other options. Factor in any lease-end fees you might avoid by buying out the lease, such as excess mileage or wear-and-tear charges.
STEP 4: Explore lease buyout options
Unless you’re paying cash, you’ll need financing for the buyout. One option is to get a loan to buy out your auto lease from a bank, credit union or even the leasing company itself. Shop around for the best interest rates and terms on auto loans as well as any special programs for lease buyouts.
STEP 5: Complete the paperwork
After you’ve figured out how you’ll pay, you’ll work with your leasing company to transfer ownership. They’ll handle the title transfer and registration details. Make sure you understand what documents you need to provide and any deadlines you need to meet.
The auto lease buyout process typically takes a few weeks from start to finish. If your lease-end date is coming up, start the process now to try to avoid any last-minute issues.
How to decide if a lease buyout is a good idea
If you’re thinking about buying your car at the end of your lease, look at a few things to help you decide, says Kevin Wince, Vice President of Consumer Lending Servicing, Projects and Risk at Navy Federal Credit Union. “Ask yourself: Is the car in good shape? Have you kept up with maintenance? Is the price to buy it lower or equal to what the car is worth today?”
Sometimes a lease buyout makes financial sense, and sometimes it won’t. Before you commit to buying your leased vehicle, ask yourself these 4 key questions to see if a lease buyout could be a good option for you:
1. Do I intend to drive the car for a long time?
If you’re planning to keep your car for several more years, a lease buyout could make more sense than starting a new lease on a different vehicle.
2. Is buying out the lease more affordable than other options?
Let’s say your car’s current market value is $15,000 and you could buy it for a $12,000 lease buyout price. That means you’re getting a $3,000 head start compared with buying the same car elsewhere.
Now, let’s say those numbers were reversed. If your car is worth $12,000 but the lease buyout costs $15,000, you’d save $3,000 by returning it at the end of your lease and buying a different, less expensive vehicle.
Wince recommends thinking about your budget, too. “Will the monthly payments fit into your spending plan? If the car works well for you and the numbers make sense, buying it could be a good choice.”
Also factor in any additional fees the leasing company may charge for the buyout (early termination, processing fees, etc.).
3. Have I exceeded the mileage limits of the lease?
Most leases come with annual mileage limits, typically between 12,000 and 15,000 miles per year. If you’ve gone significantly over these limits, you’ll face per-mile charges when you return the car. Sometimes that can cost 15-25 cents per mile (or more), which really adds up. Buying out your lease means you won’t have to pay those charges.
4. Does the car need repairs?
If your leased car has excessive wear and tear beyond normal use, you might face additional charges when you return it. When you buy out the lease, you take the car as-is and can decide if you want to make any repairs.
Financing your auto lease buyout
Many people finance their auto lease buyout with a loan rather than paying the full purchase price in cash. You have several financing options, including your leasing company, banks or credit unions. Your leasing company may not be offering the best rates, so shop around for options. When you start the process early, you’ll have time to compare offers from several lenders and pick the best one for you.
“Look at the interest rate, how long the loan lasts and how much you’ll pay each month. Make sure the loan fits your budget,” Wince says. Include potential expenses like repairs and new tires as you review your financial situation.
Your credit score will determine your interest rate and loan terms. Generally, you’ll need a credit score of at least 600 to qualify. Better rates usually require a credit score of 700 or higher.
Loan terms typically range from 36 to 72 months. That’s similar to the terms on regular auto loans.
Here are a few common questions about financing a buyout:
- Do I need a down payment for an auto lease buyout? Not always. Some lenders offer zero-down options. Others may require 10% to 20% down, depending on your credit score.
- Can I negotiate the buyout price? Usually no. The buyout price was set in your lease agreement. Some companies may negotiate if the car’s market value is much lower.
- What are typical interest rates on loans to buy out an auto lease? Interest rates for a lease buyout auto loan vary based on factors like your creditworthiness and current market conditions. Generally, they can be higher than new car loan rates because lenders may consider the car a used vehicle based on age and mileage.
Wince recommends thinking about protecting your car after you’ve bought out your lease. “You may want to consider seeing if you’re eligible for Guaranteed Asset Protection (GAP),”Footnote 1 he says. GAP is optional and “can help cover costs that traditional insurance may not in the event of a total loss.”
Key lease buyout considerations for military Servicemembers
Military life comes with unique circumstances that can affect your lease buyout decision. Frequent moves, deployments and changing financial situations mean you’ll want to think carefully about the long-term commitment of car ownership compared with the flexibility that leasing provides.
If you’re facing a Permanent Change of Station (PCS) move, consider whether owning a car makes sense for your new duty station. Think about where you’ll be when the lease ends and how easy it would be for you to return or purchase your vehicle.
“When you’re getting ready for a PCS move, it can be tough to know what to do with a leased car. In some cases, you can’t take a leased car overseas, and returning it early might cost extra. Buying the car could make things easier. You’ll have one less thing to worry about, and you’ll know you have a car ready when you get to your next duty station.”
- Kevin WincE, Vice President of Consumer Lending Servicing, Projects and Risk
It’s possible to break a car lease with military orders if necessary. Under the Servicemembers Civil Relief Act (SCRA), Active Duty military members can terminate their car lease early without an early termination fee if they receive PCS orders or are deployed for more than 180 days. While the lessor can’t charge you for the early cancellation of the lease, the lessor can still charge you for any taxes, title and registration fees, summons, or any other outstanding fees, including reasonable charges for excessive wear and tear and mileage that were due and unpaid on the date of termination.
If you do end up PCS’ing, you could take your owned car with you when you relocate, or sell it on your own timeline.
“Should I lease or buy my next vehicle?”
Listen in as our experts explain what you should keep in mind when deciding between leasing or buying a vehicle, with special financial considerations for military families.
Drive away with confidence in your decision
A lease buyout can be a smart financial move when the numbers work in your favor and you’re happy with your current vehicle. If you’re still weighing your options, Navy Federal Credit Union’s lease vs. buy calculator can help you crunch the numbers and see which choice makes the most sense for your budget. For more guidance on car financing and ownership decisions, check out our auto resources to help you make the best choice for your situation.
If you want to purchase your leased vehicle, check out our auto loan options for competitive ratesFootnote 2 and great service.
Disclosures
Your purchase of Guaranteed Asset Protection (GAP) is optional. Whether or not you purchase GAP will not affect your application for credit or the terms of any existing credit agreement you have with Navy Federal. You may choose to pay the fee in a single lump sum or you may finance it into your loan, which would increase the cost (NOTE: California Active Duty and Active Reserve Duty servicemembers cannot finance the fee). If you cancel your optional GAP coverage within 60 days of enrollment, you will receive a full refund of any fees. Additional information will be provided to you, which will include a copy of the GAP Agreement and Disclosure (NFCU23A) containing the terms of the plan. There are eligibility requirements, conditions, and exclusions that could prevent you from receiving benefits under the plan. You should carefully review the additional information for a full explanation of terms.
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↵This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.