3 Options at the End of a Car Lease
Curious to know what happens at the end of a car lease? We’ve got you covered! When you’ve made your final payment at the end of your lease contract, you have three options:
- Turn your vehicle in
- Purchase the vehicle
- Lease a new vehicle
Check out the video below or keep reading to learn about your end-of-lease options.
Option 1: Turn Your Vehicle In
At the end of your lease, you do not need to keep the vehicle. You can simply turn it in. You will have to pay a turn-in fee. The disposition fee will be listed in your contract and typically ranges between $300 and $500.
Once you do that, you can walk away with no further obligation.
Before you turn it in, you want to set up an inspection. Most leasing companies will provide a free inspection before your lease ends. Try to do this at least two months before your lease is set to end. In many cases, they will send someone to your location to go over the vehicle.
They will assess it for any damage or any excessive wear and tear and tell you how it will impact any additional charges you might have to pay under the terms of your lease agreement.
For example, cracks in the windshield, rips or stains on the car’s interior, excessive wear on the tires, or dents in the exterior may require trigger wear and tear charges that will be tacked on to your lease. If you’ve gone over your mileage limits, you may be responsible for additional mileage charges.
The reason you want to do this before you turn your vehicle in is that you have the option to get these items fixed. Once you turn the car in, you are kind of at the mercy of what they want to charge. It may be much cheaper to take care of them on your own.
If you’ve taken care of your vehicle during your lease, you likely won’t have to do anything. If you’ve done the required maintenance, such as oil changes and tire rotations, and the car is relatively free of scratches, you should be fine.
However, an inspection gives peace of mind and provides you with something in writing that tells you what you’ll be expected to fix so there are no surprises when it’s time to return the car.
Option 2: Purchase the Car
Some people choose to purchase the vehicle at the end of the lease. While it’s not always recommended, there are reasons people do enact the option to buy a car when their lease ends.
For example, let’s say you leased a Volkswagen Jetta three years ago and the purchase option at the end of the lease is $9,500. You might have an extremely difficult time finding a quality three-year-old vehicle for that price. It may still have a warranty left on it, too. It might be the perfect vehicle for a child or grandchild that’s new to driving and at an affordable price.
When you purchase the vehicle, you will also have to pay a fee. Just like the turn-in fee, initiating a purchase of your leased vehicle will trigger a one-time fee between $300 and $400. The fee will be listed in the agreement you signed at the start of your lease, but it’s easy to forget about it three years later.
It’s a good idea to go through the inspection process before you purchase the vehicle in the same way you would if you were planning to turn it in. This can provide you with an understanding of any flaws that might diminish the value or help you make a better decision about whether to turn it in or go ahead and buy it.
When you go to purchase the vehicle, one thing you should know is that you don’t need to use the dealership or the same bank to purchase it. You can get a car loan wherever you want at the financial institution or lender of your choice or you can pay cash.
You’ll sign some paperwork, verify the odometer mileage, and they will send you the title once a check clears or they get the funds from your lender. Don’t forget that if you do go ahead and buy the vehicle, you will have to pay sales tax on the purchase.
Option 3: Lease a New Vehicle
If you go to lease a new vehicle, you still want to get the vehicle inspected. Again, the inspection is free and it will give you information to make an informed decision.
It pays to look around at different makes and manufacturers to see what they are offering and find the right vehicle for you.
If you like the type of car you’re in and you want to replace it with a new one, or you want to get another type of vehicle from the same manufacturer, you’ll want to check out manufacturer lease loyalty programs. Some manufacturers offer loyalty programs, so if you stay within their family of vehicles, they may offer additional benefits, such as:
- Waiving the turn-in fee
- Offering to make the first payment
- Offering rebates
Regardless of what new vehicle you choose, you’ll turn the car to the dealership or lease company and sign a new lease for your new vehicle. You will start a new lease term and make your monthly payments.
Do Your Homework
Right now, the price of vehicles is on the high side. Surging demand, supply chain issues, and a shortage of parts for new cars have increased manufacturing costs and caused the price of both new and used cars to go higher. So, if you’re getting towards the end of your lease, you should compare the cost of a replacement vehicle.
Most of the time, leased vehicles depreciate past the residual value. Currently, we’re seeing many cases where a vehicle at the end of the lease is worth more than the residual value. In other words, that vehicle may be worth significantly more than the cost to purchase it at the end of your lease.
What Happens at the End of a Car Lease?
There you have it. When your lease is up, you have three options. Turn in the vehicle and pay the turn-in fee, buy the vehicle and pay the purchase fee and any applicable taxes, or lease a new vehicle.
Have questions about a lease buyout or your options when it comes to leasing or buying under the current market conditions? Get in touch with our teams today. We make the process simple, fast, and on terms you love.