Top Mistakes to Avoid in a Car Lease Buyout

Lynn Martelli
Lynn Martelli

A few years ago, I found myself staring at the end of a car lease and feeling like I had two equally painful options: give the car back and start all over, or buy it out and hope I wasn’t about to make a financial mistake. And I did end up buying it out, but I made a few missteps along the way.

Car lease buyouts can be smart moves, especially when used car prices are high or you genuinely love your car. However, they also come with landmines that are surprisingly easy to step on, especially if you’re going in without a clear plan.

Whether you’re asking yourself, “What is a lease buyout?” or you’re nearing the end of your lease and considering the option, let me guide you through the biggest mistakes to avoid.

Mistake #1: Not Knowing the Car’s True Value

This one’s at the top for a reason. Most lease agreements give you the option to buy the car at the residual value set at the beginning of the lease. But sometimes that number is way off from the actual market value of the car.

Before signing anything, check sites like Kelley Blue Book, Edmunds, or Carfax to see how much your car is actually worth today. If the market value is lower than the buyout price, you might be better off returning the car and finding a similar one on the used market.

Mistake #2: Not Inspecting the Car Like a Buyer Would

You’ve been driving it for three years, so of course you know the car, right? Not exactly. When you lease a car, you’re not the owner. But when you buy it out, suddenly you’re responsible for everything, past, present, and future.

Check for hidden issues, including tire wear, brake life, and even cosmetic damage. I once ignored a minor clicking noise, thinking it was “just a quirk.” It turned into a $1,000 axle replacement two months later. Do your own inspection or have a mechanic take a look. If there are any potentially costly problems, maybe it’s time to choose a car for your next lease instead.

Mistake #3: Forgetting to Negotiate

Most people don’t realize you can actually negotiate a lease buyout, especially if you’re working with a dealership that wants to make a sale. They may offer incentives, lower fees, or better financing terms just to close the deal.

Ask questions like: Can you waive the disposition fee? Is there wiggle room on the residual value? Can I get a lower interest rate through a credit union? Worst case, they say no. Best case, you save thousands.

Mistake #4: Financing Through the Dealer Without Shopping Around

It’s tempting to finance the buyout through the dealership just to keep things simple. But “simple” is often code for “expensive.”

Get pre-approved through your bank or a credit union first. They often offer much better rates than the dealer’s in-house financing, especially if you’ve got decent credit. Even a 1–2% difference in APR could mean paying hundreds (or thousands) more over the life of the loan.

Mistake #5: Not Considering the Long-Term Costs

Buying out a lease isn’t just about the sticker price. You’re buying a used car that’s now out of warranty or nearing the end of its warranty period. That means you’ll likely be on the hook for maintenance, repairs, and anything else that comes up.

I didn’t budget for that when I did my buyout. So, when my air conditioning went out during a record-breaking heatwave, I paid for it both literally and figuratively. Think ahead and factor in potential repair costs, or consider buying an extended warranty if it makes sense.

Mistake #6: Ignoring Taxes and Fees

In many states, you must pay sales tax on the buyout price, even if you have already paid taxes during the lease. And that’s on top of things like title fees, DMV paperwork, and possibly a lease-end inspection fee.

It adds up fast, and if you weren’t expecting it, it can derail your whole plan. Call your DMV or check your state’s tax laws in advance so you’re not blindsided.

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