Buying out your Subaru lease? Make sure to understand the process and fees before making a decision.

shortage of new cars pushes prices up
Subaru Lease Buyout Process: How Does It Work?Justin Sullivan - Getty Images

Subaru Lease Buyout: Key Things to Know before You Say Yes

"My Subaru lease is up, what should I do next?"

That's a difficult choice. Buying a new vehicle might be beyond your budget, especially with the current auto market conditions. Even if you're considering a used Subaru, you may not be able to find your preferred model since inventories remain low. There is, however, one option that can provide you with the car you want at a more affordable price.

Buying out the lease of your current Subaru is a good choice to retain your trusty vehicle even after the lease ends. While there are many benefits to a Subaru lease buyout, we advise you not to rush into this until you've explored all the options and done the math. In this guide, we explain the lease buyout process, discuss the pros and cons so you can decide whether it's worth it, and also share information on buyout negotiations, fees, and rates.

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Subaru Lease Buyout Process

When you lease a Forester, Legacy, Crosstrek, Impreza, or any other Subaru vehicle, you're essentially renting it for a predetermined time of, say, two or three years. At the end of the lease, you can:

  • Lease or purchase a new Subaru

  • Return your current car and lease or purchase another car brand, such as a Toyota

  • Or take ownership of your trusted Subaru by buying out the lease

A Subaru lease buyout allows you to purchase the vehicle instead of returning it at the end of its lease. If you decide to go down this route, here are the steps involved in the process:

Determine the Buyout Price

The buyout or payoff amount is mentioned in the lease agreement you receive at the beginning of the contract. This is the amount you'll need to pay the dealership along with other fees and taxes to own the vehicle. An early lease buyout also includes part of the remaining lease payments. An important part of your buyout price includes the car's residual value. This is what the leasing company determined the car will be worth once the lease term runs out.

Decide How You'll Pay for It

If you've saved up for the purchase, you can simply write a check to the dealer for the buyout amount. The other alternative is to apply for an auto loan to finance the buyout. Subaru offers financing from Chase Direct Auto for existing car owners. However, since Chase may charge higher interest than other lenders, you should compare different options to find the best auto loan rate based on your credit profile.

Complete the Buyout Paperwork

Whether you decide to use cash or financing for the buyout, you'll need to complete the necessary paperwork before taking ownership of the vehicle. This usually includes a title transfer, bill of sale, and registration documents. Before finalizing these, note any taxes and fees, such as a purchase option charge, that you need to pay and ask any questions you have about the buyout process.

Arrange for Payment

If you decide to pay out of your pocket, you can simply provide the check to the leasing company or the dealership who is its agent. Alternatively, if you choose to finance the buyout with a loan, you'll need to coordinate with the lender to arrange payment to the dealer or leasing company.

Take Ownership

Once you've completed all the fees, the buyout payment, and the necessary paperwork, you're officially the owner of your Subaru. You'll also have to register it in your name and update your insurance. From now on, you're responsible for the repairs, maintenance, and other ongoing costs associated with the vehicle.

Is a Lease Buyout Worth It?

You need to consider several factors when deciding if a lease buyout is the right choice for you. These include the vehicle's condition and current value as well as your long-term plans and financial situation. For example, a lease buyout is a good choice if you've grown attached to your Subaru and have maintained it in good condition. Buying out the lease also saves you the hassle of shopping for a newer model. And a buyout is a cost-effective option, especially if the price is lower than the current market value of a vehicle of the same model and condition.

However, there are situations where a lease buyout isn't a good financial choice, such as if the vehicle has depreciated significantly and requires frequent repairs. In this case, it makes sense to return your leased vehicle and opt for a new lease or buy a used car that fits your budget.

Ultimately, the decision of whether to pursue a lease buyout or not depends on your specific situation. Perhaps you've been leasing a Subaru Outback for three years and you've grown attached to it. You've maintained the vehicle in good condition and are happy with its performance and features, and you don't want to go through the process of leasing a car all over again.

In this case, you can check the vehicle's current market value using an online car value estimator. Say you discover the value of a similar Subaru model and make as yours is $25,000. The next step is to check your lease agreement to find the residual value. Let's assume this is $18,000. In this case, buying out the lease is good value, as you purchase the car for $7,000 (excluding taxes and fees) less than its current market value.

Gain Additional Benefits

Additionally, if you plan to keep the car for several more years, buying out the lease instead of a new one offers additional benefits, such as no more monthly lease payments or mileage penalties. In this scenario, a Subaru lease buyout would make sense, as you would get a car you like at a cost-effective price. However, if you use financing for the buyout, don't forget to factor in your monthly car loan payments.

Do Your Research

It's crucial that you carefully evaluate your finances, analyze the current condition of your vehicle, and consider all your options before making a decision. Alternatively, you can consult a qualified automotive professional or financial advisor for their input on whether a lease buyout is a good choice.

Can You Negotiate a Subaru Lease Buyout?

Subaru doesn't negotiate the purchase option price of its vehicles. You can find this in the lease document you received from the dealer at the beginning of your contract. It's mentioned as a fixed dollar value and is usually equal to the residual price of the vehicle. If you decide to buy out the lease, you'll have to pay this amount to purchase the vehicle. Subaru doesn't budge from the figure in the lease agreement. You can, however, look at potentially negotiable fees. While taxes and many fees aren't negotiable, the purchase option fee may be.

Subaru Buyout Fees and Rates

The specific buyout fees and rates depend on the terms of your lease agreement and vary from one lessee to another. Here are a few general factors that determine your buyout fees and rates:

  • Residual value: This is the car's estimated value at the end of the lease term. The buyout price is usually the residual value plus any applicable taxes and fees.

  • Fees: Some dealers charge additional processing fees during the lease buyout. These vary from one dealer to another and again depend on the terms of your lease agreement.

  • Interest rate: The interest rate on the loan for the buyout depends on your credit score. Subaru offers lease financing options via Chase Auto. However, you're not guaranteed the best rates, so we highly recommend you shop around for financing options to get the best deal.

  • Taxes: At the time of the buyout, you'll have to pay any remaining applicable sales taxes on the purchase price. These vary depending on where you live and where you've registered the vehicle.

It's important that you carefully review the terms of your Subaru lease agreement and connect with your dealer or leasing company to calculate the fees and rates that apply to you.

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