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. You need to look for the "purchase option price" and read the fine print of your contract. Usually comprising the residual value of the car at the end of the lease is this price which is set by the leasing company and it also has a purchase fee option 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." It is the loss in value or the expected depreciation of the vehicle over the scheduled-lease period. For example, at the end of the lease, a car with a sticker price of $40,000 and a 50% residual percentage will have an estimated $20,000 value.
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. You need to know the amount 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.
There is gleaning price information from different sources and this should give you a fair estimate of the retail value of your vehicle. Now, all you have to do is compare the two amounts. If the actual retail value is higher than the residual value, then you're a winner. The bad news is that it's likely a car that's coming off a lease to be a little on the high side. Try not to 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. Put forward a price that is below your actual target and negotiate hard until you wind up near that figure. Getting your car at the market value if not slightly lower is a possibility.
Knowing the cost of buying out your lease is the first thing you need to do. You need to look for the "purchase option price" and read the fine print of your contract. Usually comprising the residual value of the car at the end of the lease is this price which is set by the leasing company and it also has a purchase fee option 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." It is the loss in value or the expected depreciation of the vehicle over the scheduled-lease period. For example, at the end of the lease, a car with a sticker price of $40,000 and a 50% residual percentage will have an estimated $20,000 value.
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. You need to know the amount 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.
There is gleaning price information from different sources and this should give you a fair estimate of the retail value of your vehicle. Now, all you have to do is compare the two amounts. If the actual retail value is higher than the residual value, then you're a winner. The bad news is that it's likely a car that's coming off a lease to be a little on the high side. Try not to 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. Put forward a price that is below your actual target and negotiate hard until you wind up near that figure. Getting your car at the market value if not slightly lower is a possibility.
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