Now that you have come at the end of you lease, you like your car enough to want to keep in the driveway. Just like buying a used car, there is some research to be done to nail a good deal.
First, you need to know the cost of buying out your lease. What you need to do is read the fine print of your contract and try to find the “purchase option price.” This price is set by the leasing company and usually comprises the residual value of the car at the end of the lease plus a purchase-option fee ranging from $300 to $500. Having signed on the dotted line means that aside from a monthly financing fee, your monthly payments were calculated as the difference between the vehicle’s sticker price and its estimated value at the end of the lease. This estimated price of the car value at the end of the lease is what is termed in leasing jargon “residual value”. It is the expected depreciation – or loss in value – of the vehicle over the scheduled-lease period. An example would be a car that has a 50% residual percentage and a sticker price of $40,000 will have an estimated $20,000 value at the end of the lease.
Now that you know the cost of buying out your lease, you need to determine the actual value, also termed “market value”, of your vehicle. Do you know how much your car retail costs in the market? You need to do some pricing research in order to pin down a good, solid estimate. Checking the price of the vehicle that has similar mileage and condition with different dealers is a must. For detailed pricing information, you need to use online pricing websites. Giving you a fair estimate of the retail value of your vehicle is the gleaning price information from various sources.
You’re a winner, in case the residual value is lower than the actual retail value. Unfortunately, there is a good chance a car coming off a lease is a little on the high side. But you shouldn’t despair. Since leasing companies are aware that the residual values on their vehicles are greater than their market value, then they are always on the lookout for offers. The price of your leased vehicle can be knocked down with some smooth negotiating tactics.
A price that is below your actual target is what you need to put forward and until you are near that figure, negotiate hard. Chances are you’ll get your car at the market value if not slightly lower.