13 May What price should I expect if I buy out my car lease?
Q. My car lease is ending soon. Is the leasing company required to honor the residual value stated on the lease? And if I were to buy out the lease, would the only finance option be through the current leasing company?
A. You have many options here.
And the tight supply market for both new and used cars should be part of your consideration.
“Speak to the leasing company and see if you were to buy it, how much it would cost,” said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton. “It should match your contract.”
Once you have that number, take the car to several dealerships and see what they would give you for it, Lynch said, noting that inventory for new and used cars is very low and they need cars. You may be surprised at what they may give you, he said.
If you don’t ultimately keep your current car, you can use it as part of negotiations for a new car.
“Many dealerships are selling new cars above MSRP, which I have to say really irritates me,” he said. “If you need a new car, speak to several dealerships and look at this as a package. Ask ‘What can you give me for my car? What will the new one cost?”
In terms of financing it, you are not obligated to finance through them, Lynch said. Speak to your bank, maybe check online and see who offers the best pricing, he said.
Lynch said he’s a fan of buying certified pre-owned cars then driving them into the ground.
“Once I finish making the payments, I continue making payments, but they go into my investment account. If I do that, the next time I should have enough money to pay for the new car in cash and not have to deal and pay for financing,” Lynch said. “Over time, this saves a tremendous amount of money. Even if you think the financing is great, they are not doing it for free and they are making money off you.”
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This story was originally published on May 13, 2022.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.