When the date approaches for the end of your car lease, you need to start considering your options. The lease holder will likely present you with five different end-of-lease options, including the choice to purchase the vehicle, extend the lease, trade for a new car lease, re-lease or walk away from the lease agreement. Your decision will affect how you need to prepare the vehicle for inspection at the end of the lease.
One of the main types of end-of-lease options is the decision to return the vehicle to the lessor and be released from your agreement. You no longer make payments on the car and can drop insurance coverage. You need to first submit to an inspection to determine if you owe any money on the car. Another option is to extend the lease agreement. You contact the bank and ask for the lease agreement to be extended for a set period of time. The bank in most cases will allow you to lease the car for the same amount as in your previous agreement.
Besides turning the car in or extending the lease, the bank will likely offer the option to buy the vehicle. The lessor will present you with a buyout price, which is usually presented in your lease contract. If you want to own the vehicle, you can pay this price and have the title transferred to your name. Another end-of-lease option is to trade in your old lease for a lease on a new vehicle. In this case, a new lease is acquired for another new vehicle.
The buyout value of a leased car is not always the same as its true value. You should look at the Kelley Blue Book value to determine if the vehicle is worth purchasing through the lease company.
Another potential end-of-lease option is to take out a new lease on the vehicle. This is rarely done, though, since most new car leases have competitive pricing and allow you to lease a brand-new vehicle every couple of years.
If you do decide to walk away from the lease, make sure your mileage falls within the required range and that the car has not suffered major damage. You can face hefty fees if the mileage goes over the amount permitted within your lease agreement. Also, the car will have to go through an inspection to determine whether you owe money for damage or wear and tear.
