At the end of your car lease, you have three primary options: you can return the vehicle, buy it for a predetermined price, or lease a new car. The best choice depends on the car's current market value, your financial situation, and your future needs. The process involves a final inspection for excess wear and tear, settling any mileage overage fees, and paying a disposition fee.
The first step is understanding your lease-end options. About 90 days before your contract ends, the leasing company will contact you. Your contract will specify the residual value—the price to buy the car at lease end. Compare this amount to the car's current market value using resources like Kelley Blue Book. If the residual value is lower, buying the car could be a smart financial move. If it's higher, returning the lease is likely better.
Before returning the car, it undergoes a lease-end inspection, typically conducted by a third-party agency. They will create a report noting any damage that exceeds "normal wear and tear," such as large dents, cracked glass, or significantly worn tires. You have the right to be present for this inspection. It’s wise to fix any issues yourself beforehand, as dealer repair costs are often higher.
Finally, you'll need to address any final payments. This includes:
- Excess mileage fees: These are charged per mile over your agreed-upon limit (e.g., 12,000 miles per year). Fees commonly range from $0.15 to $0.30 per mile.
- Excess wear-and-tear charges: Costs for repairs beyond the allowed standard.
- Disposition fee: A flat fee (often around $300-$500) to cover the lessor's cost of preparing the car for resale.
Many lessors will waive the disposition fee if you immediately lease or purchase another vehicle from the same brand.
| Lease-End Consideration | Typical Cost/Factor | Key Details |
|---|
| Excess Mileage Fee | $0.25 per mile | Based on the difference between your contract mileage and actual odometer reading. |
| Disposition Fee | $395 | A standard fee charged by many manufacturers when you return the lease. |
| Tire Tread Depth Minimum | 4/32 inch | Tires with less tread are considered excess wear. |
| Dent/Chip Allowable Size | 2 inches | Damage larger than a credit card may be charged. |
| Residual Value | Set at lease inception | The fixed purchase price is in your contract, non-negotiable at lease end. |
| Early Termination Penalty | Varies widely | Can be very costly if you end the lease well before the maturity date. |
