My lease is over. Now what?

Congratulations! You’ve made it to the end of your lease term. The big question you need to answer is do you want to keep the car or turn it in? Here’s what you can expect and what your options are:

If you’re within the last 90 days of your lease you’ve probably received communication from the lessor about what your options are.

There are a couple of things you should do BEFORE you turn your car in:

The first thing you will want to do is compare the Purchase Option amount that is listed on your lease agreement to the vehicle’s current Market Value. If the purchase option is lower than the market value, consider buying the vehicle to keep or to re-sell for a profit.
More on this in a moment.

If the purchase option amount is higher than the Market Value, your best option is to turn the vehicle in at lease-end. To do this, it is not necessary to go back to the original dealer. This is a benefit of an Independent Leasing Company. A leasing company can assist you with your turn-in and help arrange a new lease for any make or model. They may be able to offer you better lease options through alternative finance sources like a bank.

A word of caution: if the Market Value is lower than the Purchase Option, the lessor may try to persuade you to buy it. The Lessor stands to incur losses when they try to sell your vehicle at auction after you turn it in. Many lessors contract with a remarketing company to put the “hard sell” on you to buy it. Unless you can negotiate a purchase price at or near the Market Value, you are better off turning the vehicle back to the Lessor at lease-end.

Second, make sure the vehicle is inspected PRIOR to you turning it in. You should receive a written inspection report along with any wear and tear fees. If you are going to be charged for wear and tear, then you want to know about it before you turn it in.
You can save money by having the items fixed instead of paying the wear and tear fee.

Depending on market conditions, it may be possible to obtain a lower Purchase Option with the lessor. To gain an edge in the negotiating process, do not show interest in buying the vehicle. If they want you to buy it but think you just want to turn it in, you’ll have more bargaining power. Have your vehicle’s Market Value handy as you work with the remarketing company in establishing a price.

The Decision
If you think you want to buy your leased vehicle you’ll want to compare the purchase option to the market value. You can get this from or by looking at similar vehicles for sale in the classifieds (online or newspaper) to see if this option really makes financial sense.

If the purchase option is higher than the market value, then you probably want to turn it in. If the purchase option is lower than the market value, then you may want to consider buying it because you will immediately be in an equity situation.

Also consider how much you like the vehicle and whether it’s given you any serious mechanical problems.

If the market value is higher than your purchase price, consider selling the vehicle to a friend or a retail buyer for an amount slightly over the purchase price. A word of caution: there could be double taxation depending on the state you live in. This happens because the lessor has to sell the vehicle directly to you and charge you sales tax. You then turn around and sell it to your buyer and they have to pay sales tax. This can be avoided by having a dealer buy the vehicle from the lessor and then sell it to your buyer. Dealers are tax exempt when purchasing a vehicle for re-sale. If a dealer is willing to do this they usually charge a fee. This service can also be performed by