Yahoo Autos Here's How A Honda Lease Buyout Works
A car lease is the most affordable way to get into a brand-new Honda. Instead of paying the car's entire purchase price, you just pay for the vehicle's estimated depreciation over the months you own it plus any applicable finance charges and taxes. If you're getting a Honda vehicle for the first time, leasing allows you to try out the car's functionality and features without the commitment that comes with buying a new vehicle outright.
Once you fully experience one of Honda's award-winning vehicles, you may find that you're loath to give it back. That's where a Honda lease buyout comes in. While your car lease gives you temporary use of the vehicle, it typically includes some fine print regarding purchasing it later. Learn how a Honda lease buyout works so you can drive your Honda home from the dealer once and for all.
What Is a Lease Buyout?
A lease buyout, also known as a purchase option, allows you to buy your leased vehicle before or at the end of the contract from a Honda dealership. During the lease term, most of what you pay goes toward covering the vehicle's depreciation. At the end of the lease, you can purchase the car outright by paying for the vehicle's residual value along with any taxes and fees. Many car buyers cover this payment with an auto loan, but you can also pay in cash.
Wanting To Buy Your Honda After The Lease Ends? Compare Auto Loans Here
Honda Lease Buyout Process
If you're considering a Honda lease buyout, the first thing to do is review your lease contract. Look for the car's residual value. This is the pre-determined price the leasing company estimated your car would be worth at the end of the lease term. It is part of the buyout amount you'll need to pay to purchase your vehicle at or before the lease end. You can compare the residual value with the current market value to decide if a lease buyout makes financial sense.
The lease will also tell you when you can buy out the lease. Some contracts allow for an early lease buyout, which lets you purchase the car before the end of the lease. If your contract doesn't allow this, you should still be able to do a lease-end buyout after your lease contract is complete.
Reviewing your lease ahead of time will give you a full arsenal of knowledge when it comes time to navigate the buyout process. This also lets you know how much you'll need to save or finance to purchase the vehicle.
You can start looking into auto loans a couple of weeks before you plan to make your purchase. While a credit inquiry associated with taking out a new loan dings your credit score a little, most credit reporting agencies allow you to comparison shop within a 14- to 45-day window and lump inquiries together when they occur within a short period.
Honda Buyout Fees and Rates
There are many possible fees associated with your car lease and the buyout process. Check your lease contract to determine:
Residual value of the car: The largest portion of your lease buyout cost is the car's residual value listed in the lease contract.
Fees for extra mileage or wear and tear: When comparing lease-end options, it's important to understand both the price of a buyout and that of returning your vehicle. If you've racked up extra mileage, or the vehicle has sustained extensive wear and tear, you may face hefty fees if you return it when the lease is up. Buying out the vehicle can help you avoid these.
Other buyout fees and taxes: Some dealers charge purchase option fees when you buy out a vehicle. However, if your contract doesn't detail these fees, you're not obligated to pay them. If your dealership tries to impose additional fees at the last minute, contact Honda Financial Services, as they usually handle the lease and can help you navigate this sticky situation. Your lease buyout can also include sales taxes, registration and title fees, documentation charges, and remaining lease payments — for early buyouts.
Can You Negotiate Honda Lease Buyout?
Check your Honda lease contract to find out if you're eligible for an early buyout or need to wait until the contract expires and is paid in full to buy the vehicle. It's best to wait to discuss a buyout until your dealer contacts you toward the end of the lease. If you reach out too early, it will show the dealer how keen you are to purchase the car, and you may lose some negotiating power. The residual value of your Honda is usually non-negotiable, but you may be able to talk your dealer down on other fees, such as any purchase option charge.
Is a Lease Buyout Worth It?
A Honda lease buyout comes with pros and cons. You're locked into the purchase price set when you signed the lease, so you don't have much negotiating power. However, buying out your lease may be more affordable than returning the vehicle if the following apply:
The buyout amount is lower than the vehicle's market value.
You've exceeded your mileage allowance and must pay a hefty fee.
You'll have to pay for your vehicle's sustained wear and tear if you return it.
You love your Honda and don't want to start over with a new vehicle.
If your buyout amount is significantly higher than the car's market value, you may want to consider other options. You can extend your lease for another term, lease a newer Honda, or return your leased vehicle and purchase a different Honda.
Consider your options carefully to find the right one for you. A Honda lease buyout may be the perfect solution to the problem of how to keep your treasured vehicle when your lease is up.
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