A car lease buyout means purchasing the vehicle at the end of your lease at the residual value specified in your lease contract. You can pay cash or finance the purchase with a lease buyout auto loan from a bank, credit union, or the captive lender (the automaker's financing arm). Buyout loan rates depend on your credit profile and vary by lender — compare at least your bank or credit union against the captive lender's offer before deciding.
At the end of a car lease, you typically have three options: return the vehicle, lease a new one, or buy the vehicle you've been driving. That third option — the lease buyout — has become increasingly common when used-car values are strong or when the lessee is attached to a vehicle they've maintained carefully.
When you signed your lease, the contract included a residual value — the price the leasing company expected the car to be worth at lease end. That residual is the price you pay if you decide to buy the car. It's fixed in your contract; the leasing company cannot change it after you've signed. If used-car market values have risen since you signed, the residual may be below current market value — meaning you're getting the car at a discount relative to what you'd pay on the used market. If values have fallen, the residual may be above market, making the buyout less attractive.
Most buyers finance a lease buyout with a lease buyout auto loan rather than paying cash. The mechanics are the same as a standard auto loan: you borrow the residual value (plus any applicable taxes and fees), make monthly payments over a fixed term, and own the car outright when the loan is paid off. Lenders that offer lease buyout loans include:
Lease buyout loan rates are set by the lender based on your credit profile — your credit score, debt-to-income ratio, loan term, and loan-to-value ratio all factor in. Rates vary meaningfully across lenders and across credit tiers; a borrower with strong credit and a short-term loan will typically access a much lower rate than a borrower with fair credit on a long-term loan. The CFPB's auto loan guidance recommends shopping at least two to three lenders for any auto financing, including buyouts, to find the best terms.
The captive lender (your automaker's financing arm) is the most convenient buyout financing source — but not necessarily the best-priced one. Get a quote from your bank or credit union before committing. Even a 1-2 percentage point rate difference on a $25,000 buyout loan over 60 months is several hundred dollars.
Whether buying out your lease makes financial sense depends on three factors:
Most leases also allow an early buyout — purchasing the vehicle before the lease term ends. The price in this case is typically the residual value plus the remaining lease payments still owed (since the leasing company needs to recover what the lease was worth). Early buyouts are financially attractive in limited situations: if the car has been in an accident, has accumulated significant excess mileage charges that will be due at return, or if the market value has risen sharply above what the early buyout price would total. Review your lease contract for the early buyout calculation or call the captive lender directly.