The short answer is “yes” but the approach that you take will most likely determine whether or not you are successful at purchasing your vehicle for a lower price than the amount listed in the lease agreement. When you lease a car, the lease agreement typically includes a dollar amount that you can purchase the car for at the end of the lease. That dollar amount is essentially a guess by the bank that is providing the financing for the lease as to what the future value of your vehicle will be at the end of the lease. If you don’t currently lease a car but are interested in doing so then see here for info on your personal guide to car leasing. If you find out car leasing isn’t for you and you have purchased vehicles through auctions, scouring second hand listings or stocking brand new cars for your business, you may want to look into something like traders insurance to conduct business in the UK legally if this is what you are aiming to do. Also, if you wish to find out more about buying a car at the end of your current or future lease agreement continue to read below:
Lease Buyout Calculation
Step number one in the negotiation process is to determine what your vehicle is worth. Did the bank guess right or wrong? If the purchase amount in your lease agreement is $25,000 but you find that the vehicle, based on current market conditions, is only worth $18,000, you probably have room to negotiate the purchase price of your vehicle but you have to do your homework. Compare your vehicle’s purchase price to the retail value of local auto dealers. If you can show the bank that there is a local auto dealer trying to sell the exact make and model of your leased car with similar milage, the bank will be more likely to accept a lower purchase price realizing that they guessed wrong.
Deal Directly With The Bank
You may have noticed that I continue to reference the “bank” in the negotiation process and not the “dealer”. This is intentional. Some leasing banks allow dealers to increase the cost of the lease buyout to make a profit. Dealers can also charge document fees, which are taxable in most states. It may also be advanteous to line up your own financing for the lease purchase amount before entering into the negotiation process. If the dealer arranges the financing for you, it can sometimes increase your interest rate to make more money on the purchase. By dealing directly with the leasing bank you can cut out these additional costs.
You Make The Offering Price
Start by making an offer to the leasing bank based on your market research. Also make sure you contact the leasing bank well in advance of the lease “turn-in date”. The bank may not be able to provide you with an immediate response to your offer so give yourself plenty of time for the negoation process to work.
Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.