Yes, you can finance a car after your lease ends. This process, known as a lease-end purchase, is a common option written into most lease contracts. You have the right to buy the vehicle at its pre-determined residual value—the car's estimated worth at the end of the lease term. The key is securing financing, often through your bank, credit union, or even the leasing company itself, to pay this amount.
The decision to finance your leased car hinges on a few factors. First, compare the residual value to the car's current market value. If the residual is lower, you're getting a good deal on a vehicle whose history you know intimately. Second, get pre-approved for an auto loan to understand your interest rate and monthly payment. This new loan will replace your lease payment.
It's not always the best financial move. If the residual value is higher than what similar cars are selling for, you'd be overpaying. Also, consider the car's condition. You're responsible for any excess wear-and-tear charges if you return it, but if you buy it, those issues become your problem to fix.
| Financing Consideration | Key Data Points & Comparison |
|---|
| Residual Value vs. Market Value | Residual: $18,000. Average Market Price for same model/year/mileage: $19,500 (based on Kelley Blue Book data). Verdict: Advantageous to buy. |
| Typical Auto Loan APR (60 months) | Excellent Credit (720+): 3.5-4.5%. Good Credit (660-719): 5.0-7.0%. Average Credit (620-659): 8.0-12.0%. |
| Potential Savings | Avoiding lease disposition fee (~$300-500) and excess mileage charges (e.g., $0.25/mile over 12,000 miles/year). |
| Warranty Coverage | Remaining factory bumper-to-bumper warranty: 12 months/15,000 miles. Powertrain warranty: 36 months/36,000 miles remaining. |
| Projected Costs if Returned | Estimated wear-and-tear charges: $400. Excess mileage charge (2,000 miles over): $500. Total potential savings by purchasing: $900. |
Start the process 2-3 months before your lease ends. Contact the leasing company for the official buyout quote and then shop around for financing. This gives you time to make an informed decision without pressure.
