What “Lease buyout” means
Your lease contract lists a purchase option price, usually the residual value plus a purchase option fee. At lease end you can pay that, plus sales tax and registration in most states, and own the car. Before the end, the buyout is the payoff quoted by the leasing company.
Whether it’s a good deal depends on the market. If similar cars sell for more than your buyout, you have lease equity.
How it shows up at the dealership
Dealers may offer to “handle the buyout” and add their own fees or a markup. Leasing companies often let you buy directly from them. Some limit buyouts by third-party dealers; check your lessor’s current policy.
Worked example · illustrative numbers, not a quote
Is the buyout worth it?
| Residual on contract | $24,000 |
| Purchase option fee | + $350 |
| Buyout before tax | $24,350 |
| Similar cars retail for | about $27,500 |
| Built-in value | about $3,150 |
Sales tax on the buyout depends on your state. Get a payoff quote from the leasing company, not just the dealer.
What to do
- Request the buyout quote from the leasing company 60–90 days before lease end.
- Compare it with instant offers and retail prices for the same car.
- If financing the buyout, get a credit union rate; it’s a used-car loan.
What to say
“I’d like to buy the car directly from the leasing company at the contract residual plus the purchase option fee. Is there any dealer fee involved?”
Also called: buyout price, purchase option price, residual buyout.