Buying out a lease is a value decision, not just a bill
When a lease ends, you can hand the car back or buy it for the residual value written into the contract. Most calculators stop at the bill — they add up the residual, the purchase-option fee, and sales tax and call it done. But that number only tells you what buying out costs, not whether it’s a good idea. The decision hinges on a second number entirely: what the car is worth right now.
The equity check
equity = market value − (residual + fee + sales tax)
A positive result means the car is worth more than it costs to buy out — you’d capture that difference as instant equity. A negative result means you’d pay more than the car is worth, and a comparable car could likely be bought for less.
What makes this calculator different
- Equity vs. overpaying — the real verdict. We compare the all-in buyout cost against the car’s current market value, so you see whether buying out gains you equity or costs more than the car is worth.
- The true, all-in cost. The residual is only part of it. We fold in the purchase-option fee and sales tax for the number you actually pay.
- Residuals lag the market. A residual set years ago can sit well below today’s used-car prices, which is exactly when a buyout becomes a bargain.
- Finance it, optionally. Turn the buyout into a monthly payment to see the cash-flow side and the interest you’d pay.
Frequently asked questions
Should I buy out my lease?+
The right answer turns on one comparison: the all-in cost to buy out (the residual price in your lease, plus the purchase-option fee and sales tax) versus what the car is actually worth on the open market today. If the car is worth more than the buyout costs, buying out captures that difference as instant equity — a good deal. If it costs more than the car is worth, you’d be overpaying, and you could likely buy a comparable car for less. This calculator runs exactly that comparison and gives you the verdict.
What’s the difference between the residual value and the market value?+
The residual value is the buyout price the leasing company set at signing — a prediction, made years ago, of what the car would be worth at lease-end. The market value is what the car is genuinely worth now (a KBB or dealer trade-in estimate). These two numbers rarely match. When used-car prices rise, the market value can sit well above the fixed residual, which is why so many leased cars are now worth more than their buyout price.
What fees and taxes apply when I buy out a lease?+
Two costs sit on top of the residual. First, a purchase-option fee — a flat charge (often a few hundred dollars) the lessor adds for exercising the buyout. Second, sales tax, charged on the buyout price at your local rate, because buying out is treated as a purchase. This calculator adds both to the residual to give you the true, all-in buyout cost rather than just the sticker residual.
Can I finance a lease buyout?+
Yes. If you don’t want to pay the buyout in cash, a bank, credit union, or the leasing company’s captive lender can finance it like any used-car loan. Toggle financing on to see the monthly payment, the total of payments, and the interest you’d pay over the term. Just remember that interest adds to the real cost of keeping the car, so factor it into the equity comparison.
Can I buy out my lease and immediately sell the car for the equity?+
Often, yes — and when the car is worth more than the buyout, that gap is real, cashable equity. Some people buy out and sell to a dealer or private buyer to pocket the difference. Watch for two wrinkles: some leases restrict third-party buyouts (the lessor may only sell to you, not directly to a dealer), and selling means paying the buyout’s sales tax and any fees first. The equity figure here is your starting point — subtract selling costs to see the net.
Disclaimer: This calculator is for educational purposes only. Residual values, fees, taxes, and used-car prices vary by lease, lender, and jurisdiction, and lease terms may restrict buyouts. It is not financial, tax, or lending advice.