Can You Negotiate on the Payoff Price at the End of a Lease?

If the end of your vehicle lease is in sight, you might be mulling over whether to buy the car (most leases allow it) and wondering if you can negotiate on the lease payoff price that you’ll owe the lender. In most cases, the answer is no.

Related: Is Now the Time to Buy Out Your Car Lease?

“The lease-end purchase option price is set forth in the lease contract and cannot be negotiated down,” said Michael Sin, co-founder of leasing information site Leasehackr. “It’s based on the residual value originally set by the lender.”

But keep in mind that these days you’re probably getting a good deal at that payoff price. The residual value written into your pre-pandemic lease was the lender’s best guess at the time, but times have changed. Your leased car likely is worth substantially more in today’s market of inflated used-car prices. For specifics, you can use Cars.com’s online appraisal tool to check your vehicle’s current value versus its buyout price. You can profit from that increase by buying your leased car, even if just to sell it.

“Yes, almost every lease that was entered into two-three years ago is in a positive equity position,” said Zander Cook, COO and co-founder of Lease End, a company that helps lessees make lease-end decisions. “While the buyout amount cannot be negotiated, most consumers will benefit in the current environment by buying out their lease and capturing the equity that has been built up.”

Meanwhile, the lender has no incentive to deal on price and likely would rather have the car back to get the equity and help replenish its used-car inventory. “Some brands intentionally make it very difficult for consumers to find their current payoff price and buy out their lease,” says Cook. Sin notes that some automakers “are making it harder for lessees to cash out on their lease equity, but prohibiting third-party dealers from buying out leases.” And this year, Tesla and Ford (for EVs) eliminated buyback options altogether for new leases.

Things You Can Negotiate

While the payoff price is a given, along with your state taxes and title fees, other factors in the total you’ll spend to buy the car could be worth haggling over.

With the lessor: Some lenders might be willing to negotiate waiving any buyout fee in the lease — generally a few hundred dollars charged to sell you the car. Can’t hurt to try. Also, it’s worth asking about loan rates and any possible financing incentives for your buyout.

With the dealer: Many leasing companies require you to handle the lease buyout at one of the brand’s dealers rather than directly; others require it in at least some states. Your lease documents should include that information or you can call the lender for it. If dealing directly with the lender is allowed, it is cheaper, though more trouble. “Customers can save money by buying the vehicle directly from the lender,” says Sin, “but they will have to procure financing on their own (if needed) and deal with registering the vehicle themselves.”

If you must use a dealer, be ready to negotiate over fees. The dealer will at least want to charge you a document fee for handling the transaction; that fee is capped in some states, but it is negotiable, particularly if you want to sell the car to the dealer or use it as a trade-in.

Beyond that, some dealers will try to tack large additional fees onto the purchase price. All fees should be itemized on your invoice, and before you go to the dealer, you should check your lease documents carefully or call the lender to determine the charges you’ll owe. A rule of thumb should be that if a fee or amount is not specified in your lease documents, it is negotiable. Beyond extra fees, Sin says, “Some dealers will require you to finance through their lenders at interest rates that are profitable for them, and it’s also an opportunity for them to sell additional finance and insurance products such as extended warranties.”

Keep in mind that you can return the vehicle to any of the brand’s dealers, not just the one where you got the vehicle, so shop around. You should research the fees at several dealers and know that if you get hit with surprise costs, you can go elsewhere.

The surprises can be substantial. In a couple of incidents this year in the New York area, a WABC-TV consumer reporter uncovered a pair of cases in which dealers tried to take advantage of unwary lease buyout customers. In one case, the dealer deceptively inflated the lease contract buyout price by $3,000 on the purchase documents, and in the other, the dealer attempted to tack on a $3,000 “processing” fee.

More From Cars.com:

• Should You Buy Now or Wait to Save on a Car?
• Ford Ends Lease Buyout Option on All EVs
• Tesla No Longer Allows Lease Buyouts on Any Models
• How Does the Inventory Shortage Impact Leasing?
• What Is Residual Value?
• How Does Leasing a Car Work?
• Glossary of Car Leasing Terms
• More Leasing News

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