Yahoo Autos Can Another Dealership Buy Out My Lease? What To Know.
If you're at the end of your lease agreement or want out of your lease early, you may wonder, "Can another dealership buy out my lease?"
A typical lease is between you and the dealership. A lease allows you to borrow a vehicle for an agreed-upon monthly rate for a specified period. You return the leased car to the dealership at the end of your lease agreement. If you're not ready to give up your vehicle, you may be able to buy out the lease. In some cases, another dealership may be able to buy out your lease, but that depends on your lease agreement.
Learn everything you need to know about lease buyouts, including how to find out if another dealer can buy out your lease or what alternatives may be available if a buyout isn't an option.
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Can Another Dealership Buy Out My Lease?
It depends. While many dealerships may be willing to buy out your lease, whether you can sell it to them depends on your original lease agreement. A lease means the bank or dealership owns your vehicle, though most dealerships will allow you to trade the car in for the right sale price.
However, whether your lease agreement allows another dealership to buy out the lease depends on the company. Some car manufacturers, including Audi Financial, Acura Financial, BMW Financial Services, and Ford Credit, have partial or complete restrictions on third-party lease buyouts. GM Financial and Honda have also joined the list of brands that don't allow you to sell your lease outside the brand.
Fewer dealers are currently allowing third-party companies to sell to another dealership at the end of the lease period due to a shortage in the supply of vehicles. Supply chain disruptions and microchip shortages have led to high prices for new car purchases and leases. Market conditions mean demand is currently higher than supply, so most dealers don't want to sell to another dealership.
However, even if your leaseholder doesn't allow a third-party company to buy out your lease, there may be other options available.
What Happens at the End of a Lease?
At the end of your lease, you have a few options, including the following:
Buy the vehicle: Most dealerships allow you to purchase your vehicle at the end of your lease. You can obtain a lease buyout loan to purchase the vehicle at its residual value, which is its useful value at the lease's end.
Return the lease: You can turn in your lease at the end of your lease contract. Remember that the dealer may impose excess wear and tear fees or mileage penalties.
Allow another dealer to buy out the lease: Some lenders may allow another dealership to buy out your lease, but this varies depending on the company.
Your lease contract determines your options at the lease end. Meanwhile, your residual value impacts how much you can expect to pay to purchase your current lease. Some lenders may offer these options to lease customers before the end of the lease period. You can always contact your leaseholder to find out how a lease buyout works with it specifically and request the lease buyout amount.
Reasons to Request a Dealership Lease Buyout
You might request that another dealership buys out your lease for one of the following reasons:
To lease a new vehicle: When another dealership buys out your lease, it frees up that monthly payment so you can get a new lease and change your vehicle.
To buy a new vehicle: If you have equity in your lease, you may be able to sell it to a third-party dealership and put the sale price toward purchasing a new vehicle.
You have positive equity: Equity refers to the difference between the lease's residual value and the vehicle's market value. You may have positive equity at the end of your lease if your vehicle maintained its value or you used significantly fewer miles than your lease contract permitted. If you have a lot of equity and allow another dealer to buy out the lease, you could significantly decrease the amount it will cost to purchase another vehicle.
Some people want out of a lease if they can no longer afford the payments. Even if your lease contract doesn't allow another dealership to buy out your lease, the leaseholder may offer financial restructuring programs that can make your monthly payment more affordable.
Lease Buyout Considerations
Just because another dealership is willing to buy out your lease, doesn't mean that it's the best financial decision. Here are a few unique considerations to think about before trading in your lease to another dealership:
Calculate the Value of the Lease
Find out what your vehicle is worth before deciding if it's worth trading in. You can determine the market value of your vehicle using tools such as Kelley Blue Book. You can also use Edmund's appraisal tool to determine your vehicle's value. Then, compare this with your leased car's residual value. You can usually find this information on your lease documents or by contacting your leaseholder.
If the appraisal value exceeds the residual value, it may be worth buying out your lease. If your vehicle's appraisal is lower than its residual value, it may not be worth it.
Your Lease Terms Will Change
Whether you turn in your vehicle at the end of the lease to the original dealer or a third party buys out your lease, you can expect your new car lease terms to change. When the leasing company takes back the vehicle at the end of the lease or a third-party dealership buys out your lease, it ends the original contract. You may decide to lease another vehicle or even finance the purchase of a new or used car, but the lending terms will differ.
If your credit score has worsened, you can expect a higher interest rate. If the vehicle you lease or buy has a higher purchase price, you may also be subject to higher monthly payments.
Lease Buyouts Can Help with Negative Equity
Negative equity is when you owe more on your lease than its current market value. The most common reason for negative equity is if you pay over market value for a lease, don't qualify for a competitive interest rate, or incur high mileage or wear and tear fees. Finding a dealer willing to buy out your lease with negative equity may be challenging.
If your vehicle's market value is lower than its residual value, it may not be worth buying out your lease; rather, it may be better to return the car to the dealership. If you still want to buy the vehicle, shopping around to find a good deal is important. Dealerships offer rebates or buying incentives, which can help you get the best deal possible. If you still have negative equity after negotiating, a higher down payment may help. While most lenders will allow you to roll negative equity into your new car loan, this often dramatically increases your monthly payments.
Your Leaseholder May Charge a Higher Dealership Rate
Leaseholders that allow third-party buyouts may charge the dealership a higher rate than your buyout amount. It may be better to buy out the lease yourself and then trade it in or sell it to the dealership. However, before selling the vehicle to the dealership, you must obtain financing, pay your state's sales tax, and register the car and title in your name.
How to Request a Dealership Buyout
If you determine that having a third-party dealer buy out your lease is the best financial decision and your contract allows it, follow the below steps:
Review your lease contract: A lease contract is between you and the financial institution or credit union that financed your vehicle. If your contract excludes third-party buyouts, you'll have to explore other options.
Determine the residual value of your car: Work out the residual value of your vehicle by reviewing your lease contract.
Contact dealerships: Even if your leaseholder allows a third party to buy out your lease, you'll have to find a dealership willing to do so. Contact three or four dealers to inquire about lease buyouts.
Call and request a lease buyout price from your leaseholder: Next, obtain a lease buyout quote from your dealer. Ensure that you inform them that a third party plans to buy out your lease, as this may affect their price.
Can another dealership buy out my lease? That depends on your leasehold and contract. If a third-party lease buyout isn't an option, you may be able to sell your car through a private sale and pay off the lease or buy it out yourself.
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