What Is a Buyout Price?

The buyout price is the amount you must pay to purchase your leased vehicle, usually at the end of the lease term. It is based on the vehicle’s residual value set at lease signing and may include a purchase option fee.

The buyout price is listed in your lease agreement.

Is the Buyout Price the Same as the Residual Value?

They are closely related but not always identical.

• Residual Value: The projected value of the vehicle at lease end, determined at the start of the lease.

• Buyout Price (Purchase Option Price): The amount required to purchase the vehicle, which typically equals the residual value plus any purchase option fee.

The buyout price does not change based on market conditions.

How the Buyout Price Is Determined

At lease signing, the leasing company calculates:

• Vehicle MSRP

• Expected depreciation

• Lease term

• Residual percentage

Example:

• MSRP: $30,000

• Residual value after 36 months: $15,000

If your contract includes a $350 purchase option fee, your total buyout price would be:

$15,000 + $350 = $15,350 (plus taxes and registration fees)

When Does It Make Sense to Buy Out Your Lease?

Buying the vehicle may be a good decision if:

• The car’s market value is higher than the buyout price

• You’ve exceeded mileage limits and want to avoid penalties

• You prefer keeping a vehicle you know

• Interest rates for new financing are higher than expected

If the market value is lower than the buyout price, returning the vehicle may be the better option.

What About an Early Buyout?

If you choose to buy the vehicle before the lease ends:

• The payoff amount may include remaining payments

• Additional fees may apply

• The total may differ from the scheduled lease-end buyout

You must request an official payoff quote from the leasing company.

Are There Taxes on a Lease Buyout?

Yes. In most states, you must pay:

• Sales tax on the buyout amount

• Title and registration fees

Tax treatment varies by state, so confirm with your leasing company or local DMV.

Can You Sell the Car Instead of Buying It?

Some lenders allow third-party buyouts (selling directly to a dealership). Others require you to purchase the vehicle first before reselling.

Policies vary by leasing company.