What Is a Lease Purchase Option?

A Purchase Option in the context of car leasing refers to the lessee's right to buy the leased vehicle at the end of the lease term. This option is typically outlined in the lease agreement and provides the lessee with the opportunity to acquire ownership of the vehicle rather than returning it to the lessor.

Explanation: When entering into a car lease, a Purchase Option serves as a potential pathway for lessees who have developed a strong attachment to their leased vehicle or find it to be a good long-term investment. This option allows them to transition from being a lessee to becoming the outright owner of the car.

Examples: Let us say you have been leasing a vehicle for a few years, and you have grown fond of it. Toward the end of the lease term, the lease agreement might include a Purchase Option that allows you to buy the car at a predetermined price, often known as the Buyout Price. This Buyout Price can be a predefined figure, or it may be based on the current market value of the vehicle.

For instance, if your lease agreement stipulates a Buyout Price of $15,000 and the market value of the car is $18,000 at the end of the lease term, exercising the Purchase Option could be a financially attractive option. It provides you with the chance to secure ownership of the car at a price potentially lower than its current market value.