Should I buy out my leased vehicle at the end of the term?


Four years has gone by in a blink of an eye, and your leased vehicle is due to return to the manufacturer in few days, what should you do? First of all don’t panic, there are few commonly asked questions you should ask yourself before making the final decision.

Question 1 – Should I purchase this vehicle or return it?

This will depend on few factors such as vehicle condition, mileage, make and model. If you are driving a brand that is known for its low resale value such as domestic brands, or high maintenance brands such as Jaguar, Saab, VW, you should consider returning the lease back to the manufacturer. The reason behind this logic is simple, since every vehicle is a depreciating asset, the longer you hold on to it will only cost you on maintenance, repairs and resale value. You can probably purchase another 4 year old vehicle in the same make and model for less amount compare to your residual value. On the flip side of that coin if you have a highly desirable brand such as Honda, Toyota, BMW, Mercedes then you should consider keeping the vehicle for yourself. Since you are the owner of the car since new there is no one else knows better about this car other than yourself. You know if the vehicle has been involved in a collision or poorly maintained or serviced. If you have a low mileage desirable brand on your hands you should consider keeping the vehicle.

Question 2 – Can I make a profit from selling my leased vehicle?

In very rare cases yes, but majority of the time you are taking on an unnecessary risk that can potentially cost you more than you can make. For example if you have a late model Honda Civic with relatively low mileage and all the service records, this car may sell for $12-13000 on the market place. However your payout at the end of the lease is about $10,000. In Canada you have to pay the HST when buying a vehicle therefore your cost will be $11,300. Because this vehicle was leased through Honda Canada, the lien holder or owner of the vehicle belong to Honda, and you may not sell this vehicle before you pay it in full. The potential 700 – 1700 profit will need to cover for expenses such as emission test, safety certificate, advertising and potential discount you have to offer. If you are looking to sell this vehicle for profit you should think about the consequences carefully before making the decision.

Question 3 – Will I be charged for anything when I return my vehicle?

This scenario will vary depending on the make and model as well as the damage incurred. For example if your vehicle brand has a very high resale value, the amount you will be penalized will be bare minimal. The reason is simple, since the resale value is very strong on your vehicle, the dealership and the manufacturer will want you to return the leased vehicle so they can sell that same vehicle for profit again as a certified used car. But if the selling brand has a low residual or resale value this will be the exact opposite. Normally the manufacturers will allow “normal wear and tear” on a leased vehicle. This means minor scratches or dents are expected, but anything that will require body shop to repair will be labeled as a chargeable item. You should also be aware that items such as windshield, tires, will also be considered as chargeable item, the bare minimum requirements to pass safety certificate is expected when you return the vehicle.

Author Rick Tao Li, for more useful articles like this one please visit me online at


Source by Rick Li