Can You Purchase a Car Mid-Lease?

You can purchase a vehicle in the middle of a lease contract or trade it to a dealership to pursue another purchase. Financing or trade obstacles may exist because of the vehicle's equity. Consider the benefits and disadvantages of purchasing a car in the middle of its lease so you can decide if it is financially beneficial.

Buyout Price

Call your leasing bank to find out your leased vehicle's buyout price. The price is often equal to the number of monthly payments you have left and the lease buyout amount, which is stated in your lease contract as the last payment. A dealership can do the same if you plan to trade the car toward another purchase. In the event that you trade the car, you can transfer negative equity to your new car's purchase price. If you owe less than the vehicle's purchase price, you can put the credit toward your new purchase as a down payment.

Value

Purchasing the lease may not prove worthwhile if you owe significantly more than the vehicle's current value. Depending on the vehicle's negotiated price when you initially leased it, the amount of payments you made and your leasing term, you may have too much negative equity in your car to finance it or trade it in. After you have the car's purchase price, check retail values. Edmunds.com or the Kelley Blue Book website offers vehicle appraisal tools. Use the guides to access your vehicle's suggested retail pricing.

Financing Issues

If you are upside-down in your car, you may have difficulty obtaining a loan for the lease purchase price. In this event, you likely have to offer a down payment to decrease the car's negative equity. If you apply to finance the leased car, make sure you note all of the vehicle's options. Banks decide vehicle lending amounts based on value, which increases when the vehicle has more features. Be sure to note vehicle features such as leather, a sunroof, alloy wheels, a navigation system or DVD player before you pursue financing.

Disadvantage

Depending on the current market value of your vehicle, it may not make sense to purchase it. Most lessees initially pursue a lease based on its monthly payment, not the vehicle's overall price. Because it is likely you leased the vehicle at or close to its sticker price, a down payment is likely necessary. Checking the sales price of other like vehicles can help you to determine if the purchase is worthwhile. Most states do not charge tax on the total price of a leased vehicle, so expect to pay taxes on your purchase price as well.

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