A car lease is one of the most common ways to get behind the wheel of a new vehicle. It's especially attractive if you can't afford a high down payment or aren't sure you want to own the car for more than a few years. However, when your lease reaches its predetermined end, you'll have decisions to make about how to proceed.
One of the simplest options at the end of a car lease is to buy the vehicle outright. This means paying the buyout amount determined at the beginning of your lease and listed on your lease agreement. In many cases the buyout price is higher than the vehicle's true value, but buying a leased car allows you to keep the car you've been driving for several years, which may be your preference over switching to a different car. Buying outright also gives you the chance to sell or trade in the car as if you owned it all along, which can be profitable if it's worth more than the money you put into it.
The opposite of buying a leased vehicle outright, walking away means you turn in the car and stop making payments. If you've exceeded the annual mileage limits or if the car shows any major damage, you'll be responsible for additional fees. Your monthly lease payment will disappear and you'll be free to buy or lease another car from any dealer or find alternate transportation and do something else with the money you've been putting toward the lease.
A New Lease
In most cases, when a lease reaches its end you'll have two options for keeping the vehicle under a new lease. One option is extending the existing lease, under the same terms and for the same monthly payment, for a short time. This gives you time to look for a new vehicle or decide what to do. The other option is a used-vehicle lease on the same car. This type of lease involves a new term and new payment amount. It will allow you to keep the car for an extended time, but when the used-car lease is over you still won't own it outright.
Trading in a leased vehicle is another option for some drivers. Auto dealers may offer early lease trade-ins that allow drivers to trade in their current, about-to-expire leases for new vehicle leases. Dealers use trade-ins to keep your business or acquire leased vehicles in good condition so they can sell them as used models. Dealer incentives, such as agreeing to forgive excess mileage fees on your lease, may make an early trade-in worthwhile, especially if you were considering a new lease anyway.