Consumers in the market for new vehicles must make a number of decisions before getting behind the wheel of a new car. Some may debate whether or not to buy a new or preowned vehicle, while others may wonder if buying or leasing is best for them. People who decide to lease will likely have another decision to make when their leases reach maturity: Should I return my car or buy it?
Drivers who have never leased a vehicle may not even know that lessees have the option to buy their cars at the end of their lease agreements. The idea of leasing suggests drivers would always be better off turning their vehicles in, but there are situations in which keeping the car can benefit buyers.
• The buyout figure is less than the market value of the vehicle: Lessees who don’t drive much might find that their vehicles are worth more at the end of the lease than the buyout figure indicated on the agreement. That means lessees can buy the vehicle for less than its market value. They can then flip the vehicle and reap a profit or simply keep driving the vehicle.
• The excess mileage penalties are steep: Drivers also may be better off buying if they significantly exceeded their mileage restrictions. Lease agreements typically include per-mile penalty fees for every mile drivers go past the mileage limits indicated in their agreements. These fees can quickly add up, but drivers won’t have to pay them if they choose to buy their vehicles at the end of their leases rather than returning them.
• The condition of the vehicle: Drivers who took care of their leased vehicles and even those who did not may benefit from keeping their cars when their leases reach maturity. Keeping a leased vehicle that’s been well-maintained can save drivers money over the cost of buying new vehicles, as the buyout value on their lease is likely a lot less expensive than the cost of a new car or truck. But keeping vehicles that have enduring considerable wear and tear also may be wise, as leasing companies may charge hefty wear-and-tear penalties.
Buying a vehicle at the end of a lease may seem unusual. But there are various instances when buying makes more sense than turning the vehicle in.
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