Yes, you can lease a car and then buy it. Almost every standard lease contains a purchase option that lets you buy the vehicle when the term ends, and many contracts also permit an early buyout. The price is set in your original lease agreement as the residual value, plus fees and taxes. Whether exercising that option is a good deal depends on one comparison: the contract price versus what the car is actually worth today.
Is the Buyout Worth It?
The math is simple. Look up your car’s approximate market value in Kelley Blue Book or a similar pricing guide, then compare it to the purchase option price in your lease. If the residual is $18,000 and comparable vehicles are selling for $22,000, you have roughly $4,000 in built-in equity. If the residual is $18,000 and the car is worth $15,000, you’d be overpaying by $3,000 for a car you could replace for less.
Equity isn’t the only reason a buyout works out. You already know the car — every repair, every scrape, every quirk. Buying from yourself removes the guesswork of the used market. And if you’re well over your mileage allowance or facing wear-and-tear charges, a buyout erases those penalties entirely. The leasing company stops caring about the odometer and the door dings the moment the car becomes yours. For drivers staring down thousands in end-of-lease fees, the buyout sometimes pays for itself before any equity is factored in.
What You’ll Pay
The residual value is the core of the buyout price. The leasing company set that number when you signed, projecting what the car would be worth at term end, and it doesn’t move with the actual used-car market. You’ll find it in the purchase option section of your lease.
On top of the residual, expect a purchase option fee, typically a few hundred dollars, listed in your contract. Some dealerships add their own documentation or processing fees for handling the paperwork, and amounts vary widely. A handful of states cap those dealer fees; most don’t. Ask for an itemized breakdown, and push back on anything that wasn’t disclosed in your original lease.
Sales tax applies to the buyout price in every state that collects it. In some states, you already paid sales tax on your monthly lease payments, which can create an effective double-tax when you also pay tax on the buyout. Check with your state tax authority before you commit, because this cost surprises people. Any unpaid fees, property taxes, or late charges from the lease also get rolled into the payoff amount.
Buying Early vs. Waiting Until Lease-End
An end-of-lease buyout is straightforward: you pay the residual, fees, and taxes, and the car is yours. The residual was designed for exactly that moment.
An early buyout costs more. The payoff usually includes the residual plus the remaining depreciation your payments haven’t covered yet, plus an early termination fee. Some leasing companies add administrative charges scaled to the months left on the contract. Federal law requires that early termination penalties be reasonable relative to the actual harm the leasing company suffers from ending the contract early.1Office of the Law Revision Counsel. 15 USC 1667b – Lessee’s Liability on Expiration or Termination of Lease In practice, “reasonable” still means hundreds or thousands of dollars.
If you’re not sure whether to buy now or wait, most leasing companies will extend the lease month-to-month for a short period. You keep making your regular payment, which buys time to shop loan rates or watch the market without triggering early termination costs.
Third-Party Buyout Restrictions
If your plan is to have another dealership or an online buyer pay off the lease and hand you the equity, check your leasing company’s policy first. Several major captive lenders now restrict or prohibit third-party lease buyouts. Honda, Acura, BMW, Audi, Ford, and GM Financial have all implemented policies preventing lessees from selling their leased vehicles to outside dealers. You can’t just drive to a competitor’s lot and let them handle it.
The workaround is a two-step process: buy the car yourself at the residual, then sell it separately on the open market. The catch is you’ll pay sales tax on the buyout, and the next buyer may pay tax again at registration, which eats into your profit. Not every manufacturer imposes these restrictions, so read the lease or call before making plans that depend on a third-party sale.
Financing the Buyout
If you don’t have cash for the full amount, you’ll need a lease buyout loan. These function like standard auto loans: the lender pays the leasing company the payoff, and you make monthly payments to the lender. Banks, credit unions, and online lenders all offer them.
As of early 2026, average buyout loan rates run roughly 6% to 7% for borrowers with credit scores above 740, climbing into double digits below 670. Most lenders require a minimum score around 600 to qualify at all. A percentage point or two on a $20,000 loan adds up over four or five years, so shop multiple lenders. Credit unions consistently beat bank rates on auto lending, and if you already belong to one, start there.
The lender will want a copy of your lease, the payoff quote, and possibly a vehicle inspection. Because the car is used, buyout loans are priced like used-car financing, which typically carries slightly higher rates than new-car loans.
How to Complete the Buyout
Request a Payoff Quote
Ask your leasing company for a formal payoff quote. It states the exact dollar amount required to close out the lease and includes an expiration date, usually 10 to 30 days out. The quote accounts for the residual, any outstanding balance, the purchase option fee, and accrued charges. If you’re financing, your lender needs this document to issue the loan.
Submit Payment and Paperwork
Once the money is in place, send payment to the leasing company’s payoff department. Most require certified checks or bank wires because the funds are guaranteed. If you’re using a lender, the lender typically wires the payoff directly.
Federal law requires an odometer disclosure when a title changes hands.2eCFR. 49 CFR Part 580 – Odometer Disclosure Requirements The leasing company usually handles this form as part of the title release, but confirm the mileage recorded matches your actual reading.
Get the Title and Register the Car
After payment clears, the leasing company releases the lien and sends you the title or an electronic lien release. Certified funds typically move this along in about 10 business days. Personal checks push the timeline closer to two weeks. Some states use electronic title systems, so the release may be digital rather than a mailed paper title.
Take the title or lien release to your local motor vehicle agency along with proof of insurance and payment for title transfer and registration fees, which vary by state. The agency issues a new title in your name. The lease isn’t fully closed with the state until this step is done.
Insurance After You Own It
While leasing, you were almost certainly required to carry collision and comprehensive coverage on top of your state’s liability minimum. If you buy the car outright with cash, those requirements go away, and you can drop the extra coverage to lower premiums. Whether that’s wise depends on the car’s value and your financial cushion.
If you financed the buyout, your new lender will impose similar coverage requirements, so premium savings wait until the loan is paid off. Either way, notify your insurer about the change in ownership and have the leasing company removed as an interested party on the policy.
Federal Protections on Lease Disclosures
The Consumer Leasing Act requires every lessor to disclose key lease terms in writing before you sign, including whether you have the option to purchase and at what price.3Office of the Law Revision Counsel. 15 USC Chapter 41, Subchapter I, Part E – Consumer Leases The buyout terms can’t be buried in fine print or introduced later. The law also requires disclosure of any early termination penalties, all fees and taxes, and the method for calculating your end-of-lease liability.
Regulation M, which implements the Act, requires these disclosures to be clear, conspicuous, and provided in a form you can keep.4eCFR. 12 CFR Part 1013 – Consumer Leasing (Regulation M) If your lease doesn’t clearly state the purchase option price, the method for calculating an early buyout, or the fees involved, the lessor may be in violation. That’s leverage. If the numbers in your payoff quote don’t match your contract or include charges never disclosed, you have grounds to challenge them before you write a check.