When you decide you want to get an auto loan to buy your leased vehicle, one of the first things you’ll need to do is find the right lender. But researching auto loan lenders and rates can be very labor-intensive. Most of us don’t have that kind of time to spare. This article will show you the average lease buyout loan interest rates so you know what a good deal looks like.
Then, we’ll share a helpful shortcut that can drastically cut down your research time while increasing your chance of finding the best loan rate available to you.
What are the average rates on a lease buyout loan?
Below are the rates and terms offered by leading auto loan lenders that finance lease buyouts:
There are no industry-wide reports on the average rates for a lease buyout loan. However, here are the average interest rates on a $15,000, 48-month used vehicle loan, according to MyFico. These figures can give you a ballpark idea of what your interest rate should be on a lease buyout loan with respect to your credit score.
What factors impact your lease buyout loan rate?
Several factors impact the rate a lender will offer you for an automobile lease buyout, including:
- Car type
- Loan amount needed
- Credit score
- Annual income
- Education level
- Employment status
- Debt-to-income ratio
- Military status
- How frequently you get paid
- Whether you rent or own your home
The best way to find out what you can get is to apply for pre-approval with several lenders. Do it for free without hurting your credit.
Lease buyout FAQ
Can you negotiate a lease buyout?
Yes. While the residual price of your leased vehicle is set when you sign your lease contract, there are some cases in which you will be able to negotiate down the buyout price and the fees. It’s definitely worth a try.
What is a lease buyout option?
When a lease comes to an end, the person leasing the vehicle will have three options. They can return the vehicle, trade it in for another one, or purchase it.
Purchasing the vehicle is also referred to as taking the car lease buyout option. Doing so often involves paying a buyout fee in addition to the residual price of the car and any applicable taxes.
Can you buy out a lease early?
Yes, the majority of leases include the option to buy out early. However, it’s usually not the most cost-effective route. This article explains in detail the costs, benefits, and disadvantages of buying out of a lease early.
What is a lease buy out loan?
A lease buyout loan is a loan in which the proceeds are used to buy a leased vehicle. Finding one can be a little tricky as some lenders will not finance lease buyouts. Others will, however, and you can also resort to an unsecured personal loan.
Is it better to lease or to buy?
According to Kerri Moriarty, a small business consultant with a financial services background, “Something everyone should know about leasing and buyouts is that leases are designed for customers to fail and dealerships to profit.
The annual mileage terms are generally lower than most people’s average commute. So, you’re most likely going to go over and face devaluing the car or paying the penalty.
Also, the monthly payments for leases are cheaper than those for loan payments, which makes leasing more attractive. However, the dealer knows that you’ll most likely turn in a car that is worth less than the buyout price.”
She adds, “As long as you go in with eyes wide open about how leasing works and the pros and cons, you’re able to stay in control and determine a setup that works for you.
I’m on my third lease, I don’t drive much at all, and the car is in perfect condition. I’ll confidently purchase this one at the end of my lease next year, and I know it will be a solid car for years to come!”
Find your best rate on a lease buyout loan
While finding a lease buyout loan can be a challenge, SuperMoney helps streamline the process. Our auto loan engine allows you to not only find a loan but to find the best rate amongst the loans available to you.
The truth is, the best-advertised rates on a lease buyout loan don’t really matter. That’s because they are based on an ideal borrower in a fictional scenario. What matters is which rates are available to you in your situation with your vehicle.
After answering a few questions, SuperMoney will communicate with its network of lenders to find out who will offer you a loan. Then, you can compare multiple offers side-by-side to see which one is best.
The process is free and won’t hurt your credit score. Plus, in the end, you can rest assured you got a good deal on your lease buyout.
Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar, Interest.com, Commonbond, Bankrate, NextAdvisor, Guardian, Personalloans.org and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.