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5 reasons why you might want to buy your leased car
Avoid the pesky fees and added charges that come with returning your leased vehicle to the dealership.
The average closed-end lease comes with 2 options when your term is up: Return your car or buy it from the leasing company. While the buyout price may be set at the beginning of your contract, it’s still something you can typically negotiate — and you might want to if you find yourself in any of the following situations.
1. You’ve fallen in love with the car
If you can’t imagine driving any other car and you’re ready for a larger commitment, then buying out your lease may be the right choice. This helps you avoid the hassle of shopping around for another car and potential issues that could come with purchasing a used car you’re not familiar with.
2. The car has sustained some damage
Regularly driving your car will inevitably lead to mild damage — and your lease likely already accounted for this. But if you’ve racked up more than a few minor scrapes and dings, you could face several penalty fees for excess wear and tear. Buying your leased vehicle means you can skip paying fees to have the car fixed and sold to another buyer by the dealership.
3. You’re over — or under — the mileage limit
Going over your lease’s mileage limit — typically no more than 20,000 km — can result in large fees. Buying your vehicle avoids them entirely, as well as disposition fees and other charges that come with returning the car to the leasing company. But you’ll have to balance this out. Since many leases come with a buyout fee generally ranging from $500-$1,000, being just a few kilometres over the limit may not make buying your car worthwhile.
On the other hand, if you only drove your car a few thousand kilometres, you’ll practically be handing the leasing company your money if you choose to return the car. Buying out the lease means you can sell the car yourself and benefit from its added value. You may also have the option of returning the car and receiving a cheque from the leasing company for the difference between its actual value and estimated residual value. But you can typically turn a larger profit if you sell the car yourself.
4. You already found someone who wants to buy the car
If you have a friend who wants to buy your car, you can always purchase it from your leasing company and sell it to them. However, you’ll be on the hook for sales tax. To avoid this, you can also contact a local dealership to see if they’re willing to do a lease pass-through, in which the dealership buys your car first and then immediately sells it to your friend. The dealer will turn a quick profit, plus it saves you from paying sales tax and makes the transfer process easier.
5. You can negotiate a lower buyout price
Leasing companies will sometimes offer a lower buyout price to avoid having to pay for shipping and auction fees after you return your car. But just because it’s less than what’s on your original contract doesn’t mean it’s a good deal — you’ll still want to negotiate further to get the lowest possible buyout price. The closer you can get to the wholesale value of the car, the better.
Compare car loans to buy your leased car
Whether you’re seriously over your mileage limit or simply can’t bear the thought of parting with your leased set of wheels, buying out your car lease can come with a few benefits. Doing your research on sites like the Canadian Black Book and autoTrader.ca can help inform negotiations and ensure that you get a competitive price.
When you’re ready to commit, compare your car loan options to help you finance your buyout.
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