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Leasing vrs. leasing with an option to buy?
I know a number of dealers/manufact. offer leasing as well as leasing with an option to buy (as the rates may vary from regular leasing I heard). If you enter into a regular leasing contract, complete the contract, and decide you want to purchase the rest of the vehicle, will that price differ from the the price of a vehicle if you entered into a lease with option to buy contract? I know buying is the best way to get value for your money but I was curious how that process would work. Thanks.
Public Comments
- Standard lease the car's price at the end is usually fair market value but can be higher and is not set. The only difference with the option to buy lease is that the final price is in the contract and will not change as long as the lease is not broken. But just so you know a lease is the Most expensive way to operate a car (JD power, Consumer Reports) best bet is to buy 1-2yr old used. The biggest car accidents happen on the show room floor 60% of value lost in 48 months
- Usually there will be a pre-agreed upon number, called the residual value, in your lease contract. This would be the number you would pay at the end of your lease to buy the car. Depending on this number (usually a percentage of the new car value), it may or may not be worth it to buy it out. Some leasing companies use residual values that are far above what the car will actually be worth at the end of the lease. This is used to make the lease more attractive upfront. However, if you can find a car that holds its value well, it may be worth it to you to pay the residual value at the end of the lease then trade it in. If you want this your best choice is Honda or even better Toyota. Both hold value well, and both often underestimate the residual value.
- Every lease comes with an option to purchase. It's called "residual value" which is the expected market value at the end of lease term. It also determines your monthly payments during your lease. Higher the residual, the lower the payments. This is why many luxury SUVs have low payments.... because their residual values are some of the highest in the industry. But residual value is pretty much retail value because comparable cars in the used market are priced thousands less. If you're interested in purchasing after the lease ends, it's best to discuss it with the dealer. They'd rather you buy it at a discount than auction it off at 60% of its residual value.
