When the Lease Is Up, Should You Buy?

2008 BMW Z4 M Roadster

BMW Z4, one of America's most-leased cars

Car leasing has staged a comeback over the last couple years.

If you leased a new car recently, or plan to, you’ll eventually reach the end of the agreement and face a decision: end the lease or purchase the vehicle. If you are in love with the car and want to keep it parked in your driveway instead of exchanging it for a newer model, be prepared to do some research. Remember, while it will feel like “your” car, it’s really still a used car, and you need to make sure you’ll get a good deal if you choose to buy it.

When you sign a lease, there is a “purchase option price” written into it somewhere. This price is set by the leasing company and represents the estimated residual value of the car at the end of the lease. That price plays a huge part in setting the monthly payments on a leased vehicle, which are calculated as the difference between the vehicle’s sticker price and its estimated value at the end of the lease. Is buying the car at lease-end a good deal?

Continue reading >>>