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Tips on Buying a Leased Car

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Purchasing your leased vehicle instead of returning it may prove financially advantageous, as you know the vehicle’s maintenance and repair history. Lack of such information can be a problem with used car purchases.

Also, if you went over your mileage allowance, you can save on lease-end fees by purchasing the car instead of returning it.

 

Tips on Buying a Leased Car

Tips on Buying a Leased Car

Call Your Bank

Call your bank to find out your lease purchase amount. The bank can also go over any fees associated with buying your car. Dealers can also do this for you and can arrange your financing so you don’t have to do it yourself. But some banks allow dealers to mark up the lease purchase amount for profit, so make sure you call the bank first.

In addition, dealers profit from handling a customer’s financing, as many banks allow the dealer to mark up the loan interest rate. Deal with the bank directly for these reasons.

 

Shop Rates

You do not have to finance your vehicle through the bank that originally leased to you. While leasing banks offer competitive rates for new cars and leasing, their used car rates are often a bit higher than those offered by other banks.

You can finance the vehicle through a local bank, so check rates in your area, including credit unions. A bank where you have an account may be able to offer you a rate discount for being a customer. Call different lenders or visit their websites to determine rate differences.

 

Check Values

Your lease purchase price was determined at the time you leased your vehicle. It was based on expected depreciation and future market values, which may have been wrongly determined. Check vehicle values at Edmunds.com or the Kelley Blue Book website to ensure you’re not purchasing your vehicle for too much money.

Doing so can cause difficulty in obtaining a loan if you’re trying to borrow more than the vehicle’s value. Or, you may find it difficult to trade out of the car in the future because of negative equity.

 

Trade-In Option

If you are buying your lease to avoid lease-end fees or over-mileage fees, you also have the option of trading the car into a dealership. A dealer will purchase the car from the leasing bank and apply any negative equity to your new purchase.

You will not incur over-mileage or other penalty fees this way. Depending on your state, your trade may be tax deductible. In this case, the trade value is deducted from a new car’s purchase price before tax is applied. This, too, can save you money.

 

Paying Cash for Car

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