Will we soon see a future when buying out your lease is no longer an option? Recently, MotorBiscuit’s Joe Santos wrote about how buying out your lease could be a good idea this year. Used-car prices fluctuate but are generally higher than usual, so your vehicle could be worth more than the expected market value when you originally leased the car. You could end up with a well-cared-for, low-mileage car with an eye-popping resale value.
But, some automakers are starting to slap restrictions and fees on lease buyouts.
Dealers are charging new or higher fees for lease buyouts
Signing paperwork | Scott Graham via Unsplash
If you’ve leased a car before, you’re no stranger to annoying fees and extra costs. From inception fees at the start to wear-and-tear penalties at the end, these costly charges are usually just a part of the process.
But new fees are starting to make lease buyouts less and less attractive to buyers on a budget. Local10 News reports on a Volkswagen lessee who was surprised with various strange fees and costs. The automaker and local dealership claimed that the lessee would need to pay about $900 to certify the vehicle before he could buy it, plus a $989 dealer fee and other costs.
Local10 couldn’t get a straight answer on why finance companies, automakers, and dealerships would be making the lease buyout process arduous and frustrating. But, if I had to guess, it would be in order to make it complicated and annoying to buy out your lease and easy and convenient to give it over to the dealership.
Some automakers won’t let you buy out your lease at all
Yahoo Finance reports that Tesla is changing its long-standing policies in response to rising car prices. After April 15, 2022, leased Tesla cars won’t be able to be purchased after the contract is up. This will ensure that Tesla will have a more consistent supply of vehicles to sell and re-sell.
This isn’t necessarily new for Tesla. In 2019, leased Model 3 EVs specifically were not eligible for lease buyouts for the supposed reason of an autonomous ride-sharing network.
Auto dealers are scrambling to find used cars to sell
If you're looking to purchase a used car, the demand continues to outpace the supply. Used car prices are up 30.4 percent over last year as the microchip shortage continues to impact the automotive industry. https://t.co/gJlglurBzL
— WNCT (@wnct9) April 17, 2022
Car leases used to be a primary source of inventory for car dealers’ used-vehicle lots. “Sell” a new car for three years, incentivize drivers to pay for service at your dealership, then buy out the leased car and sell it for a profit. It was a great system.
It’s not a surprise to hear that auto dealers now have difficulty finding cars to sell—new or used. Supply-chain issues have led to a lower number of new vehicles available, which has led to a lower number of used cars available. And companies are getting crafty.
Honda Motor Co. recently launched HondaTrue Used and Acura Precision Used, both extended certification programs for used cars, as another way to keep more cars in their inventory pool. More and more automakers are cracking down with lease restrictions.
How can you get the most out of your lease-end options?
Lease buyouts can be a great way to buy a car | Sarah Brown via Unsplash
Unless you just signed a lease agreement with Tesla this week, you likely have quite a few lease-end options available to you. The big three include buying out your lease and keeping the car for yourself or selling it; returning the car to the original dealership or another dealer and lease or buy a new car; or, return the car and just walk away.
The latter option is likely going to be your worst choice at the moment. Dealers are in desperate need of inventory, and they’re likely going to be thrilled to make a deal to get you out of your leased car and into a new one. Use that leverage to get better deals, better features, or some kind of perk.
If you can, buying out your lease is likely going to be the best choice. You may even be able to make a profit by ending your lease early and selling it to an eager private buyer. Check your contract, though—some automakers won’t allow you to sell your leased car early or return it to a non-affiliated dealership.
Will we see the end of the lease buyout option?
If I had a crystal ball and could tell the future, I wouldn’t be writing this because I would have won the lottery and moved to the Virgin Islands. But, I do have a good brain for guessing. And I wouldn’t be surprised in the least if automakers and finance companies across the board quietly cancelled the option to buy out your lease.
If, right now, you’re driving a leased car that’s in good condition, is within your contracted mileage, and is anywhere close to a popular brand, you’re sitting on a gold mine—at least for now.
Keyword: Will Lease Buyouts Become a Thing of the Past?