What Is a Lease Buyout?
A lease buyout occurs when you purchase the vehicle you've been leasing rather than returning it to the dealer. Your lease agreement specifies the residual value — the price at which you can buy the car at lease-end (or sometimes during the lease). If that price is at or below current market value, buying can be financially sensible.
The 2024-2026 opportunity: Residual values on leases signed in 2021-2022 were set before used car prices rose dramatically. Many lessees find their residual value is now below market value — meaning they can buy the car at a discount versus buying an equivalent vehicle elsewhere.
When a Lease Buyout Makes Financial Sense
The calculation is straightforward:
- Residual value < Market value: Buy it. You're getting a below-market price. The equity above residual is instant savings.
- Residual value = Market value: May still make sense if you like the car and want to avoid the hassle and cost of transitioning to a different vehicle.
- Residual value > Market value: Don't buy it at the residual. Return the car and buy an equivalent one at market price — you'll save money.
Check market value using Kelley Blue Book (kbb.com), Edmunds, or CarGurus. Get multiple data points as values vary.
Best Lenders for Lease Buyouts
1
PenFed Credit Union
Best rate for lease buyouts — explicit lease buyout loan product available
3.39% APR
2
Bank of America
Major bank with lease buyout financing — competitive rates for existing customers
4.09% APR
3
LightStream
No vehicle restrictions including lease buyouts — same-day funding available
6.99% APR
4
MyAutoLoan
Lease buyout financing available — compare 4 lenders at once
5.99% APR
5
Capital One
Lease buyout financing through dealer network
6.49% APR
Important: Some manufacturers (Honda Financial, Toyota Financial, others) will not allow third-party lenders to finance their lease buyouts — they require you to use the manufacturer's financing arm. Check your lease agreement and manufacturer policy before applying for external financing.
The Lease Buyout Process
- Review your lease agreement. Find the residual value and any purchase option fees ($300-500 typical).
- Check manufacturer policy. Some manufacturers require you to use their captive finance company. Others allow third-party financing.
- Get the vehicle inspected. Before buying, have an independent mechanic assess the vehicle's condition, particularly if you've exceeded mileage limits or there's wear beyond normal use.
- Apply for financing. Pre-qualify with PenFed or Bank of America for lease buyout loans. Compare to the manufacturer's offered rate.
- Complete the purchase. The lender pays the leasing company the residual value plus fees. Title transfers to you with the lender listed as lienholder.
Lease Buyout vs Fresh Start: The Decision Framework
| Factor | Buy Your Leased Car | Return & Finance Different Car |
|---|---|---|
| Residual vs market | Better if residual < market | Better if residual > market |
| Vehicle knowledge | You know this specific car's history | Unknown history on new vehicle |
| Transaction costs | Lower (no destination, prep fees) | Higher (dealer fees, potential first month deposit) |
| Sales tax | Usually owed on residual value | Owed on full purchase price |
| Mileage overage | May avoid overage fees | Must pay overage fees on return |
Get Lease Buyout Financing
PenFed and Bank of America both offer competitive lease buyout rates.
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