End of Lease Options: Should You Buy, Return, or Trade?

Your Lease Is Ending: Now What?

Most people start thinking about their lease ending about a month before the last payment. That is too late. The best time to evaluate your options is three to four months out, giving you time to check values, compare deals, and avoid being rushed into a decision by the dealership.

You have three main paths when your lease matures: return the vehicle and walk away, buy the vehicle at its predetermined residual value, or trade it in toward something new. Each option has financial trade-offs, and the right choice depends on your specific numbers and circumstances.

Option 1: Return the Vehicle

The simplest option. You bring the car back to any authorized dealer of the same brand, hand over the keys, and walk away. You do not owe anything further except potential end-of-lease charges.

Potential Return Fees

• Disposition fee: $300 to $500 (check your lease contract; some brands waive this if you lease another vehicle from them)
• Excess mileage: $0.15 to $0.30 per mile over your allowance
• Excess wear and tear: Varies based on damage beyond "normal use"

When Returning Makes Sense

• The car's market value is less than the residual value (no equity to capture)
• You are within your mileage limit and the car is in good condition
• You do not want to buy or lease another vehicle right now
• You want a clean break with no further financial obligation

Pre-Return Checklist

1. Get a pre-return inspection (many leasing companies offer free inspections 30 to 60 days before lease end)
2. Fix minor damage if the repair cost is less than what the leasing company would charge
3. Check your mileage against the limit and calculate any overage charges
4. Clean the vehicle inside and out
5. Gather both key sets, the owner's manual, and any accessories that came with the car

Option 2: Buy the Vehicle (Lease Buyout)

Every lease contract includes a residual value, the price you can buy the car for at lease end. This number was set when you signed the lease and does not change regardless of the car's actual market value.

When Buying Makes Sense

If the car's current market value is higher than the residual, buying is a no-brainer. You purchase the car below market value and instantly have equity. You can keep driving it, sell it for a profit, or use it as a trade-in on your next vehicle.

Example:

• Residual value (your buyout price): $20,000
• Current market value: $25,000
• Instant equity: $5,000

Even if you do not want to keep the car, buying it and immediately selling or trading it captures that $5,000 in equity. Walking away from this money by simply returning the vehicle is leaving cash on the table.

When Buying Does Not Make Sense

If the residual exceeds the market value, you would be overpaying. Why buy a car for $20,000 when the same car sells for $17,000 on the open market? In this case, return the vehicle and either lease a new one or buy something else at market price.

Buyout Costs to Factor In

• The residual value (your purchase price)
• Sales tax on the buyout (NJ: 6.625%)
• Title and registration fees
• Any remaining payments if buying before the lease officially ends

Add these costs to the residual and compare the total to the car's market value. If there is still meaningful equity after taxes and fees, the buyout makes financial sense.

Option 3: Trade In Toward a New Vehicle

If you want a new car, trading in your lease is the most convenient path. The dealer handles the payoff, applies any equity to your new purchase, and you drive away in the new vehicle.

How the Trade-In Math Works

The dealer appraises your leased car and compares that value to the lease payoff. If the appraisal exceeds the payoff, the difference is equity that reduces the cost of your new vehicle. If the payoff exceeds the appraisal, you have negative equity that gets rolled into the new deal.

Pro Tips for Trading In at Lease End

• Get your car appraised by CarMax and Carvana before visiting a dealer, so you have competing values
• Negotiate the new vehicle price separately from the trade-in value
• If the manufacturer offers a lease loyalty incentive, factor that into your decision
• Do not rush; you have negotiating power because you can always just return the vehicle instead

The Loyalty Incentive Factor

Many manufacturers offer loyalty incentives to keep you in the brand. These might include:

• Waived disposition fee ($300 to $500 savings)
• Lease loyalty rebates ($500 to $1,500 toward a new lease or purchase)
• Pull-ahead programs (the manufacturer waives your last one to three payments if you lease a new vehicle from them early)

These incentives can meaningfully affect which option makes the most financial sense. A loyalty rebate of $1,000 plus a waived disposition fee of $400 effectively gives you $1,400 in savings for staying with the brand. Factor this into your comparison.

The Decision Framework

Three to four months before lease end, follow this process:

1. Get your residual value from your lease contract or by calling the leasing company
2. Check the car's market value on KBB, Edmunds, and by getting real offers from CarMax or Carvana
3. Compare: Is the market value higher or lower than the residual plus taxes and fees?
4. If higher: Consider buying or trading in to capture equity
5. If lower: Plan to return the vehicle and prepare for any end-of-lease charges
6. If leasing or buying a new vehicle: Check for loyalty incentives and pull-ahead programs

Common Mistakes at Lease End

• Not checking market value before returning (you might walk away from thousands in equity)
• Accepting the dealer's first offer on a trade-in without getting competing quotes
• Ignoring the pre-return inspection (finding out about charges after the fact limits your options)
• Waiting until the last week to decide (you lose negotiating leverage and time)
• Not asking about loyalty incentives (free savings most people overlook)

How Vantage Helps at Lease End

We evaluate your lease end options and run the numbers on all three paths. If buying out makes sense, we confirm the equity. If trading in is the move, we negotiate the new vehicle and ensure you capture full value on the trade. If returning is the best option, we help you prepare and minimize end-of-lease charges.

We also offer LeasePass, which provides flexibility throughout your lease term so you are never stuck waiting until the final month to figure out your options.

What Is the Catch?

There is no catch to evaluating your options early. The challenge is that most people do not know what their car is worth relative to the residual until someone shows them. The dealer who wants to sell you a new car may not volunteer this information if it benefits them for you to return the vehicle instead. Vantage charges a broker fee, but we provide unbiased guidance because our goal is the best outcome for you, not a new car sale.

The Bottom Line

Your lease ending is not a deadline to panic about. It is an opportunity to make a smart financial decision. Check your numbers early, compare all three options, and never assume returning the car is your only choice.

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