Spelling: lease buy·out loan
What Is a Lease Buyout Loan?
A lease buyout loan is a type of financing that helps you purchase the vehicle you’ve been leasing, either at the end of your lease or earlier if your contract allows it.
The definition of a lease buyout loan is simple: it’s a loan designed to cover the buyout amount listed in your lease agreement, also called the residual value, plus any applicable fees or taxes. Instead of paying that total in cash, you spread it out in monthly payments, just like a regular car loan.
Lease Buyout Loan Meaning in Car Leasing
In car leasing, a lease buyout loan refers to financing used specifically to purchase your leased vehicle, either when the lease ends or, in some cases, before.
This type of loan is unique because it’s not used to buy a new or used car from a dealer. Instead, it’s tailored to help you keep the car you’ve already been leasing. The buyout amount is typically outlined in your lease agreement and includes the residual value, plus any applicable taxes, DMV fees, or payoff charges.
The loan allows you to:
- Spread the cost of the buyout over 24 to 72 months
- Avoid paying the full amount upfront
- Skip dealer markups and lease disposition fees
In short, a lease buyout loan turns a lease into full ownership, on your terms.
How Lease Buyout Loans Work
Lease buyout loans work a lot like traditional auto loans, but they’re designed for drivers who want to purchase the car they’ve been leasing.
Here’s how the process typically goes:
- You request your lease payoff amount from your leasing company. This includes the residual value plus any remaining fees or taxes
- You apply for a lease buyout loan through a lender or service like Lease End Department. Approval is based on your credit score, income, and the car’s value
- Once approved, the lender pays off your lease, and you start making fixed monthly payments on your new loan until the car is fully yours
Unlike dealer financing, lease buyout loans can often be handled 100% online, and many come with flexible terms (usually 36 to 72 months) and no prepayment penalties.
Lease Buyout Loan in Car Leasing Agreements
You won’t always see “lease buyout loan” spelled out in your car lease contract, but the option to buy the vehicle is almost always included.
Here’s how it typically appears in leasing agreements:
- Residual value is listed in your contract. This is the pre-set price you can pay to buy the car at the end of the lease.
- Buyout option details can be found under sections, such as “Purchase Option at End of Lease Term” or “Early Termination.”
- Timeframe and conditions may be specified, such as whether you can buy early, how to notify the leasing company, and what fees might apply.
While the lease doesn’t include your loan financing terms, it gives you the right to purchase the car, which is where the lease buyout loan comes into play. You arrange that financing separately, often during the last few months of your lease.
Related Terms in Lease Buyout Loans
- Previous term: Lease Buyout
- Next term: Lease Buyout Options
- Also related: Lease End Financing, Loan-to-Value Ratio (LTV)
Understanding a Lease Buyout With Lease End Department
Choosing a lease buyout means you’re investing in a car you already know and trust, while potentially avoiding surprise fees, mileage penalties, or dealership pressure. It’s a smart move for drivers who want to take control of the process.
At Lease End Department, we make it easy with:
- Transparent lease buyout options and guidance
- Flexible financing options tailored to your credit
- 100% online process, from payoff quote to plate delivery
Thinking about buying out your leased car? Let Lease End Department guide you every step of the way: no stress, no hidden fees, just smart ownership.