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What Happens If You Lease a Car But Want To Buy It?

Education | 02/08/2022 23:00

A few years ago, you decided to lease a car. You weren’t quite ready to commit to buying a car, and the more affordable leasing payments made much more sense. But now it’s three years later and your lease is up. And you can’t bear to part with your car for one reason or another. What do you do now?


Today we’re talking all about car lease purchase – the whys, the whens, and the hows.


Here's What Happens When You Lease A Car


First up, how do car leases work?


Think of your car lease as a long term rental. You do not own the car, but instead pay to use the car. The company that owns the car will draw up a lease agreement that outlines all of the conditions of your lease. Car leases will typically outline the following:


  • The initial payment. Think of this as your first and last month’s rent. This will include your first month’s payment plus any drive-off fees that the leasing company charges. They will also deduct any rebates or trade-in credits that may be offered.

  • The lease length. How long will you use the car for? This typically ranges between three and five years, but it is possible to get shorter or longer leases.

  • The capitalized cost. The capitalized cost (also called the cap cost) is the selling price of the vehicle. Your monthly payments will be based on this amount.

  • The lease residual value. The residual value is the amount that the car will be worth after depreciation. When you lease, you are essentially paying for the depreciation of the car during your use. 

  • The money factor. This is essentially the interest on the lease. Instead of being expressed as a percentage, it is expressed as a very small decimal. Multiply the number by 2400 to get an approximation of what the APR on the lease is.

  • The monthly payments. The monthly payments will depend on the capitalized cost, the residual value, the money factor, and the length of the lease.

  • Excessive use fees. All leases have limits to the amount of miles you can put on the car. Annual mileage limits are typically 10,000 miles, 12,000 miles, or 15,000. If you go over that mileage limit, you may face some hefty fees.

  • Early termination fees. If you need to get out of your lease early, there will be fees to do so. Make sure you understand what you will be charged should this happen.

  • The car lease buyout price. The cost to buy the car at the end of the lease should be outlined in your lease agreement.


In addition to these nitty gritty details, there will be limitations and restrictions outlined in your lease agreement. These will vary greatly from lease to lease, but they will most likely include the following:

  • Customization to the car. Since you don’t own the car, you cannot customize it however you would like. This means no custom paint job, no window tinting, no new stereo system. You must purchase the car to make it your own.

  • Maintenance. You are responsible for the upkeep of the car. There will be a section of the lease that reviews exactly what you are responsible for maintaining. Oftentimes leases will cover routine maintenance, such as oil changes, and fix normal wear and tear issues. But this will vary from lease to lease. 

  • Excessive wear. Your car lease will outline what is considered normal wear and tear and what is considered excessive. If they deem there has been excessive wear and tear on your car, you may be responsible for extra fees.


If you drove your car a lot during your lease and racked up excessive mileage fees and excessive wear and tear fees, it might make more sense to buy your car. Lease purchase can be a good move if you are facing thousands of dollars in fees.


Can You End A Lease Early?

If you’re wondering how to get out of a car lease early, there are a few different ways to do so.


Early Lease Termination

If you are unhappy in your lease and need to get out of it ASAP, you can simply terminate the lease. You will be responsible for whatever payments and fees are outlined in your lease agreement. The Consumer Leasing Act requires for all leasing companies to transparently list what fees and payments you are responsible for by terminating the lease early. 


The early termination fee will take into account how much time you have left on your lease. It may also include vehicle disposal fees, transfer fees, and taxes. And on top of this you will still be responsible for any past due payments, late fees, and parking tickets that may be outstanding. 

If you are contemplating early lease termination, you should call your leasing company to get an exact cost of termination. Because of how lease payments are structured, the earlier you terminate your lease, the more expensive it will be for you.


Lease Transfer

Another option to get out of a car lease early is to transfer the lease. This may not be permitted in your lease agreement, so be sure to check the fine print. If it is allowed, you will have to make sure that the new lessee meets the credit requirements of your lender. There are many companies that will match people looking to transfer their leases to people looking to take over the leases. Websites such as swapalease.com and leasetrader.com are great places to start.


Lease Buyout

In many cases, a car lease buyout is the best way to get out of a lease early. The cost to purchase your car early should be outlined in your lease agreement. There may be additional fees to end the lease, but it still might be worth it for you depending on why you are looking to end your lease. If you buy your car early and sell it privately, you might make out better financially. 


Should I Get Out of My Lease Early?

There are pros and cons to ending a car lease early. If you have a change in life circumstances that make having a car difficult, you should do the math and see if ending your lease makes sense. But if it’s just a case of not liking your car as much as you thought you would, you might be best served to keep the lease until the end of your term.


If you want to lease a car, do a lot of research ahead of time to make sure you will still want it in a few years. 

Choosing The Right Car For Lease If You Want To Buy Later


Leasing a car with the option to buy is a great way to get a new car with lower upfront monthly payments. The monthly payments will be significantly lower than if you purchased the car new from the beginning. But how do you pick the right car for lease?


  1. Know your budget. Be sure that you can handle the monthly payments on your lease so you do not get behind on payments.

  2. See what’s available. Look around to see what cars are available for lease. This may limit your options.

  3. Be sure to test drive. Leasing a car is a big commitment, so make sure you are 100% confident in your decision. Always test drive to make sure you like the feel of the car.

  4. Do even more research. Do other drivers like this car? What are common complaints? What about maintenance issues? What about maintenance issues down the road? Will the car still be worth something when the lease is over? Ask all of these questions and talk to anyone who might have the same car. 


When your lease ends, weigh your options carefully. Think about the condition of the car – is it still in good shape or does it have some battle scars? If the car isn’t in great shape you may not want it as much, but you may be liable for some hefty fees if you choose to give the car back.


Determine what the market value of the car is and compare it to the buyout amount listed in your agreement. Is it still a good deal or did the car depreciate more than you anticipated, making it a bad investment?

If you still love your car and decide it makes more sense to keep it than to give it back, you will need to secure financing as the next step. That’s where Auto Approve comes in. With competitive rates and a simplified buyout process, keeping your set of wheels has never been easier.


And that's what you should know if you leased a car but want to buy now.


If you’re interested in a car lease purchase, Auto Approve has you covered. Our agents are eager to keep you in the car you love, all while saving you money. Our passion is saving you money, so contact us today!

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How to Deep Clean Your Car YourselfWhile automatic car washes are handy and typically fairly affordable, deep cleaning and detailing your car can get expensive and time consuming. Knowing how to keep your car clean and how to handle stains and wear and tear on the inside and outside can improve your driving experience. After all, according to AAA, American drivers spent an average of 60.2 minutes behind the wheel every day as of 2022. Making that space clean and comfortable can help that hour of driving feel less stressful.Plus, deep cleaning your car yourself can save you money, and some people find it meditative!Speaking of saving money…Here’s one more thing every car owner should know how to do: lower their car payment quickly and hassle-free with Auto Approve!Get a free quote to see how much you could save.3. 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This is true regardless of how long the vehicle’s been on the road and whether or not it’s showing any of the major old car warning signs. Preventative maintenance can help catch problems early and let you drive with confidence even after years with your vehicle. If everything’s looking good, you just need to keep an eye out for rusting, brake issues, bumping or bouncing, or a persistent check engine light. And One More Thing Every Car Owner Needs to Know…How to lower their car payment! Auto Approve can help you lower your vehicle payment in minutes.Most people are overpaying on their auto loanIf you got your vehicle from a dealership, there’s a good chance you’re overpaying on your auto loan, thanks to dealer markups on rates. Auto Approve can help you find out whether you’re eligible for a better rate and start paying less through refinancing. To get started, all you have to do is answer a few questions, no commitment required. Then, an Auto Approve associate can help you find the best deal for you. Once you choose your refinance, Auto Approve does the paperwork, making the process quick and easy!Get your free quote to see how much you could save today.
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