Yes, you can finance a car after leasing it, a process commonly known as a lease buyout. At the end of your lease term, you have the option to purchase the vehicle for its predetermined residual value. This price is set in your original lease contract and represents the estimated value of the car at lease-end. To proceed, you’ll apply for an auto loan through a bank, credit union, or even the leasing company itself to cover this cost.
The decision to buy out your lease hinges on a few key factors. First, compare the residual value to the car’s current market value. If the residual value is lower, you have positive equity, making the buyout an attractive financial decision. Second, consider the car's condition. You know its full history, which eliminates the unknowns of buying a different used car. However, you'll also be responsible for any future repairs once the factory warranty expires.
| Factor | Consideration for a Lease Buyout |
|---|
| Residual Value vs. Market Value | If the buyout price is fair, you gain instant equity. |
| Vehicle History | You have complete knowledge of the car's maintenance and driving history. |
| Financing Terms | Shop around for the best auto loan interest rate; don't just use the leasing company's offer. |
| Warranty Status | Factor in the cost of an extended warranty if the factory coverage is about to expire. |
| Upfront Costs | You may need to pay a purchase option fee and sales tax on the residual value. |
| Mileage & Wear | Excess mileage or wear-and-tear charges from the lease are waived if you buy the car. |
Before committing, get a few loan quotes and have the car inspected by an independent mechanic to assess its mechanical health. A buyout can be a smart move, but only if the numbers work in your favor.
