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Lease buyback Smart or Dumb?
Buying back your car at the end of the lease! Is it smart of dumb?
If you got into lease of a vehicle for whatever the reason may be, Is it smarter to buy back the car at the end of your lease period?
In most cases it is smart choice but lets see when it is smart to buy it back?
Most cars are priced at 50% or less of the original price at the end of the lease. A decently maintained car can last 12 years and 250K miles and may be more. Depending on the usage, you have used only 20% of car usage and giving it for 50% of the price? How about buying back and driving for another 5 years? This is where most of financial experts stress to buy a used car which just came out of lease and have very few miles on it. Why? It is barely used and heavily discounted. There is perfect value in that situation and you have nothing to loose unless the car or series is known for lot of repairs.
Now you know the complete history of the car since you drove, Were there big accidents? Regular problems? huge maintainance? how was gas mileage? These factors help you determine weather to buy it back or walk away from the lease.
Prepare a list of what is required for the car in next 24 months and estimate the costs. Usual maintainance cost for a car are approximately $1500 per year. Now add that to your buyback price or so called "purchase option price". This cost will solve your auto needs for next 24 to 36 months. If you can drive any longer without major expenses, you got a great deal there.
Also do a little research on how much difference is your buy back price and cost of similar car in the market. Even it it is same, you have advantage with your car as you know the history.
When it is better to walkaway form the lease:
If the cost of repairs and required maintainance exceeds $4000 for next two years and car is at or over allowable miles and car has been breaking down lately, then it is time to move on and leave this car to auto mechanic experts. At this point you are really buying problems and going to spend huge amount on repairs. Labour costs in excess of $100/hr.
Also consider to go towards most fuel efficient vehicle if there is one available in the market that might save you over 2000 dollars per year.
It is smart to buy the car at the end of lease if the car is maintained well, has fewer than allowable miles and the auto is with excellent fuel economic features in the class. It is dumb to buy a car at the end of the lease if you drove almost 100K miles, needs over $3000 in repairs in next 24 months and car needs more than regular maintainance.
If you got into lease of a vehicle for whatever the reason may be, Is it smarter to buy back the car at the end of your lease period?
In most cases it is smart choice but lets see when it is smart to buy it back?
Most cars are priced at 50% or less of the original price at the end of the lease. A decently maintained car can last 12 years and 250K miles and may be more. Depending on the usage, you have used only 20% of car usage and giving it for 50% of the price? How about buying back and driving for another 5 years? This is where most of financial experts stress to buy a used car which just came out of lease and have very few miles on it. Why? It is barely used and heavily discounted. There is perfect value in that situation and you have nothing to loose unless the car or series is known for lot of repairs.
Now you know the complete history of the car since you drove, Were there big accidents? Regular problems? huge maintainance? how was gas mileage? These factors help you determine weather to buy it back or walk away from the lease.
Prepare a list of what is required for the car in next 24 months and estimate the costs. Usual maintainance cost for a car are approximately $1500 per year. Now add that to your buyback price or so called "purchase option price". This cost will solve your auto needs for next 24 to 36 months. If you can drive any longer without major expenses, you got a great deal there.
Also do a little research on how much difference is your buy back price and cost of similar car in the market. Even it it is same, you have advantage with your car as you know the history.
When it is better to walkaway form the lease:
If the cost of repairs and required maintainance exceeds $4000 for next two years and car is at or over allowable miles and car has been breaking down lately, then it is time to move on and leave this car to auto mechanic experts. At this point you are really buying problems and going to spend huge amount on repairs. Labour costs in excess of $100/hr.
Also consider to go towards most fuel efficient vehicle if there is one available in the market that might save you over 2000 dollars per year.
It is smart to buy the car at the end of lease if the car is maintained well, has fewer than allowable miles and the auto is with excellent fuel economic features in the class. It is dumb to buy a car at the end of the lease if you drove almost 100K miles, needs over $3000 in repairs in next 24 months and car needs more than regular maintainance.
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