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.
Knowing the cost of buying out your lease is the first thing you need to do. Read the fine print of your contract and look for the "purchase option price". The leasing company set this price and it usually comprises the residual value of the car at the end of the lease and a purchase option fee that ranges from $300 to $500. When you signed on the dotted line, your monthly payments were calculated as the difference between the vehicle's sticker price and its estimated value at the end of the lease, plus a monthly financing fee. At the end of the lease, this estimated price of the car value is what is termed in leasing jargon "residual value." Over the scheduled-lease period, this is the expected depreciation or the loss in value of the vehicle. For example, a car with a sticker price of $40,000 and a 50% residual percentage will have an estimated $20,000 value at lease end.
Once you know the cost of buying out your lease, the actual value, also known as the market value, of you vehicle is what you need to determine. So, how much does your car retail for in the market? Pricing research is what you need to do in order to pin down a good, solid estimate. Check the price of the vehicle, with similar mileage and condition, with different dealers. Online pricing websites is what you should use for detailed pricing information. Gleaning pricing information from various sources should give you a fair estimate of your vehicle's retail value. All you have to do now is compare the two amounts.
Now, all you have to do is compare the two amounts. If the residual value is lower than the actual retail value, than you're a winner. But there is a chance that a car coming off a lease is a little on the high side, which is unfortunate. Don't despair though. Leasing companies know that residual values on their vehicles are greater than their market value and as such are always on the look out for offers. With some smooth negotiating tactics, you can knock down the price of your leased vehicle.
Put forward a price that is below your actual target and negotiate hard until you wind up near that figure. It's possible that you will get your car at the market value if not slightly lower.
Knowing the cost of buying out your lease is the first thing you need to do. Read the fine print of your contract and look for the "purchase option price". The leasing company set this price and it usually comprises the residual value of the car at the end of the lease and a purchase option fee that ranges from $300 to $500. When you signed on the dotted line, your monthly payments were calculated as the difference between the vehicle's sticker price and its estimated value at the end of the lease, plus a monthly financing fee. At the end of the lease, this estimated price of the car value is what is termed in leasing jargon "residual value." Over the scheduled-lease period, this is the expected depreciation or the loss in value of the vehicle. For example, a car with a sticker price of $40,000 and a 50% residual percentage will have an estimated $20,000 value at lease end.
Once you know the cost of buying out your lease, the actual value, also known as the market value, of you vehicle is what you need to determine. So, how much does your car retail for in the market? Pricing research is what you need to do in order to pin down a good, solid estimate. Check the price of the vehicle, with similar mileage and condition, with different dealers. Online pricing websites is what you should use for detailed pricing information. Gleaning pricing information from various sources should give you a fair estimate of your vehicle's retail value. All you have to do now is compare the two amounts.
Now, all you have to do is compare the two amounts. If the residual value is lower than the actual retail value, than you're a winner. But there is a chance that a car coming off a lease is a little on the high side, which is unfortunate. Don't despair though. Leasing companies know that residual values on their vehicles are greater than their market value and as such are always on the look out for offers. With some smooth negotiating tactics, you can knock down the price of your leased vehicle.
Put forward a price that is below your actual target and negotiate hard until you wind up near that figure. It's possible that you will get your car at the market value if not slightly lower.
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