Buy a car at the end of the lease term

Your lease is up and you love your car so much that you keep it in your driveway. Just like buying a used car, you need to do some research to get a good deal.

First, you need to know the rental price. Read the fine print of your contract and look for the “call option price.” This price is set by the leasing company and typically consists of the vehicle's residual value at the end of the lease plus a purchase option fee, which ranges from $300 to $500.

 Buy a car

 When you signed on the dotted line, your monthly payments were calculated as the difference between the car's price and its estimated value at the end of the lease, plus a monthly finance fee. The estimated value of the vehicle at the end of the lease term is what is called "residual value" in leasing lingo. 

This is the expected depreciation or loss in value of the vehicle over the scheduled lease term. For example, a car with a starting price of $40,000 and 50% interest remaining would have an estimated lease-end value of $20,000.

Now that you know the car lease buyout value, you need to determine the actual value of your car, also known as "market value." So how much does your car sell for on the market? To get an accurate and reliable estimate, you'll need to do some price research. Check the price of a car with similar mileage and condition from different dealers. 

For detailed pricing information, use online pricing websites such as Cars.com, Edmunds.com and Kelly Blue Book. Gathering pricing information from a variety of sources will give you an accurate estimate of your car's retail value.

 Now all you have to do is compare the two quantities. If the residual value is lower than the actual retail value, you win. Unfortunately, there is a good chance that the cost of the car coming out of your lease will be a little high. 

However, don't despair. Leasing companies know that the salvage value of their vehicles is higher than the market value, so they are always looking for offers. You can lower the price of your rental car using good negotiation tactics. Bid below your actual target and negotiate aggressively until you get closer to that number.

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