If you enjoy the sweet Jeep you leased, it's only natural to want to hang on to it. Buying out the lease could be the right move, particularly if the vehicle's actual value is higher than the residual price.
But there are questions you should ask yourself first.
Is It Worthwhile To Buy Out A Jeep Lease?
Say the 36-month lease is coming to term on your 2017 Jeep Grand Cherokee 75th Anniversary Edition four-wheel drive, with an MSRP of $43,505. To keep it, you can buy the vehicle for the residual price listed on your lease agreement.
The buyout can be financed, and you can make monthly payments - or you can purchase the vehicle outright with cash. However, you might be unfamiliar with what the process entails, so here's a closer look.
Review Your Contract
One of the first things to do is examine your contract or monthly statement to find out how much it will cost to purchase the Jeep. This "buyout" or "payoff" includes the residual value of the vehicle, which was determined when you leased it, in addition to the total value of any remaining payments, and possibly other fees.
The main thing you need to know is whether the Jeep's residual value is more or less than its actual value. To determine that, you can use an online calculator like Edmunds True Market Value, which asks questions about the vehicle's condition and mileage. The predetermined value assigned to your vehicle assumes you will not exceed your annual 12,000 or 15,000-mile limit. If your mileage comes in far below that cap, your Jeep's actual value should be a tad higher, making a buy a smart move.
If the residual value of your Grand Cherokee is higher than the actual value, you can try to negotiate the purchase amount or just turn the vehicle in and look for one of the current Jeep lease deals instead.
Should You Buy Out Your Jeep Lease?
To buy, or not to buy can be boiled down to a few questions, to wit: Is the car worth more than the purchase-option price? Did you exceed your mileage limit? Does the Grand Cherokee have excessive wear and tear? Can you afford the monthly payment on an auto loan? Do you love the ride?
It might not make sense to buy out your lease if the answers to any of those questions is no. However, if any of your answers are affirmative, buying the Jeep is akin to purchasing a solid used vehicle you have been taking care of and know quite well.
An Example Of A Smart Lease Buyout
Let's say your ride has a buyout price of $14,500. Over the course of your lease, you've incurred $1,250 in excess mileage fees and $850 in wear and tear charges.
However, the vehicle is in great shape mechanically and as predicted is valued at $14,500. Plus, you really enjoy it and you can handle the monthly payments. When you factor in the $2,100 in fees you'll avoid, buying could be the best move.
In summary, you must decide whether it is worthwhile to buy out your Jeep lease. The decision that is right for you hinges largely on your budget, the vehicle's price, and how much you want the ride. Before speaking with a dealer representative, have all your facts, figures, and options figured out ahead of time.
