Transitioning from leasing a car to owning it could be a great financial move, but there are some things you should think through first. Below we’ve provided you with a guide for everything you need to know.
1. Check the Buyout
Knowing when to purchase your leased vehicle is just as important as how to buy it, since the timing of the purchase changes the price you will pay. The first thing to do is check if your current lease includes a purchase option, which lets you buy the vehicle at the end of a specific time period. Also take the time to review the lease schedule to determine how much you still owe.
Make sure you look into the fine print to see if there are any fees or early termination charges if you try to buy your car before your lease expires.
2. Find the Value
You’ll want to research the value of your vehicle to see if it’s worth buying it. Use resources such as Kelley Blue Book or NADA Guides to find your vehicle. If the cost of buying your car is at or less than the current value, it’s likely a good move to do it. If the total of the buyout is something like $20,000 and your research shows the vehicle is valued at $25,000, you’d be coming out $5,000 ahead. Likewise, if the value of the car is lower than the buyout, you probably don’t want to purchase the vehicle.
3. Make Calculations
Once you know the value of the vehicle, you should consider other factors. Have you maintained the car? How is the car’s overall history — do they traditionally last long? Will you end up wanting a different car a few years down the line? If your research and your other considerations point toward buying the vehicle, you should feel confident in the decision.
4. Secure Financing
If you aren’t paying cash for your car, make sure to secure an auto loan from your credit union or bank before heading to a dealership or leasing company. Financing obtained by dealers, even if the dealer contacts lenders for you, may not be the best deal you can get, notes the FTC.
Potentially inflated leasing company interest rates can be avoided with services, such as, Auto Express Check, which allows you to confidently walk into the leasing company or dealership with a pre-approved check already in hand.
SDFCU can offer you the best fixed low rate auto loan to fit your needs, along with financing of up to 125% on your next vehicle.