A car lease offers the appeal of low monthly payments and a new car every few years, but it's a binding contract. Sometimes, circumstances change, and you might consider ending your lease early. One way to do this is by "buying out" the lease. Our Lease Payoff Calculator helps you estimate this cost. By providing the key figures from your lease agreement, you can get a clear picture of the amount required to purchase your vehicle before the lease term officially ends, helping you make an informed financial decision.
How to Use the Lease Payoff Calculator
Estimating your lease buyout amount is a simple process:
- Find Your Residual Value: Look at your original lease contract to find the vehicle's "residual value" and enter it into the calculator. This is the predetermined value of the car at the end of the lease.
- Enter Remaining Payments: Input the number of monthly lease payments you still have left on your contract.
- Enter Monthly Payment: Provide your current monthly lease payment amount.
- Calculate Your Payoff: Click the "Estimate Payoff" button to see the estimated total cost to buy out your lease.
Understanding Your Lease Buyout Price
When you lease a car, your payments cover the vehicle's depreciation over the lease term. At the end of the term, you have the option to return the car or to purchase it for its "residual value." An early lease buyout allows you to purchase the car before the lease officially ends. The leasing company will calculate a "payoff amount" to make this happen.
While the exact formula can vary slightly by leasing company, the payoff amount is generally calculated as:
Payoff Amount = Residual Value + Sum of All Remaining Lease Payments + Any Applicable Fees
Our calculator provides a solid estimate of the first two components. It's important to note that the leasing company may also add other charges, such as an early termination fee or administrative fees, which are not included in this simplified estimate.
What is Residual Value?
The residual value is a crucial number in any lease agreement. It is the leasing company's prediction of what the car will be worth at the end of the lease term. This value is set at the beginning of the lease and is not negotiable. Your monthly lease payments are largely based on the difference between the car's initial price and this residual value. A car with a high residual value (one that holds its value well) will typically have lower monthly lease payments.
When Might an Early Buyout Make Sense?
Buying out your lease early isn't always the best financial move, but there are a few specific scenarios where it can be a good idea.
- To Avoid Mileage Penalties: If you are on track to significantly exceed your lease's mileage allowance, buying out the car before the end of the term can help you avoid paying hefty per-mile penalties.
- To Avoid Wear-and-Tear Charges: If your car has sustained damage beyond what is considered "normal wear and tear," buying it out means you won't face potentially large charges for those damages when you turn it in.
- If the Car's Market Value is High: Sometimes, due to market conditions, your car's actual market value at the end of the lease might be significantly higher than its predetermined residual value. In this case, buying the car for the lower residual value is a smart financial move. You can either keep driving a car you got for a good price or immediately sell it for a profit.
- You Simply Love the Car: If you've grown attached to the vehicle and it has been reliable, buying it out can be a great option, as you know its full history.
Frequently Asked Questions
Does the payoff amount include taxes?
No, this calculator provides a pre-tax estimate. When you buy out a lease, you will be required to pay sales tax on the payoff amount, just as you would with any other vehicle purchase. You should factor this into your total cost.
How can I find out my exact payoff amount?
The only way to get the exact, official payoff amount is to contact your leasing company directly. They will provide you with a payoff quote that is valid for a specific period (usually 10-14 days) and will include all applicable fees.
Can I finance a lease buyout?
Yes. If you don't have the cash to pay for the buyout, you can get a loan to finance it. Many banks and credit unions offer specific "lease buyout loans." It's a good idea to get pre-approved for one of these loans before you commit to the buyout.
What's the difference between an early buyout and an end-of-lease buyout?
An end-of-lease buyout occurs when your lease term is complete. At this point, your buyout price is simply the residual value stated in your contract, plus any purchase option fee. An early buyout happens before the term is over, and the payoff amount is higher because it must also include all of your remaining lease payments.