Among the hundreds of thousands of people that lease a new car in Canada every year, many, although a low proportion, buy the vehicles at the end of the lease. There are multiple reasons for which, doing so isn't a bad idea at all. While I would always suggest anyone to lease again, the following examples will help you understand why sometimes buying the vehicle at the end of a car leasing contract, actually works.
You Really Like the Vehicle
If you took care of the vehicle, you like it and know that chances that during the following years it may break are really low, then the lease end is a great opportunity. Even if you went lower with the Km allowance, it means that the vehicle still has a lot of years to roll out on the roads.
Just to mention an example: let's assume you sign a three years lease for a new SUV back in 2015 for 20,000Km per year and the buyout was estimated to be 13,000CAD. After 36 months on the roads, the vehicle has only 45,000Km, because you didn't use it too much. If it is a vehicle you really like, why would you return it to lease a new one? It has low Kms, it is only 3 years old, and MAYBE the buyout price is reasonable enough to consider it. Where will you find a 45,000Km used SUV from 3 years ago for that price? Again, this is just an example.
Only you know how well/bad your car was treated, behaved and what it is actually worth to you.
Your Economic Situation Changed
There are some situations when you need to carefully analyze what your next steps are. Maybe financing buyout price is cheaper than leasing a new one. Maybe your Credit Score changed, and you may be at risk of not being able to lease again at a low-interest rate.
Many factors can alter your intention of leasing again, so always also consider acquiring the vehicle at the end.
You Exceded The Allowed Kilometres
We all make mistakes, and a wrong estimation of the yearly kilometers isn't a big deal if you didn't push it too hard. Sometimes, depending on the amount, people have to pay up to 4,000CAD for exceeding the number of Kilometres for compensating the vehicle market price drop for the dealer.
You need to do the math and decide after that. If you think it is worth, it is preferable to buy the vehicle than returning it with an additional huuuuuge amount of money.
You are a Good Negotiator
And I have to mention it this way. If you are terrific negotiating, like the car and expect to get a good deal, then you have an opportunity. Take into account that you would be, in fact, buying a used car, which initial price has been established at the beginning of the contract. This price is known as the "Residual Value." This "price" is:
- Today (or when you sign): An estimation made by the manufacturer and an agreement from the dealer to sell you the vehicle at that price when the lease is over.
- When the lease is over: It is the "MSRP" of the product you could buy. It doesn't mean that strictly it has to be sold at that price, as the buyout of a vehicle can be negotiated at the moment of the return, but I will leave that topic for another article.
There are many alternatives, and your desition will likely bend towards your situation, preferences and the vehicle condition. Just feel free to keep these all in mind.
