Spelling: lease pay·off amount
What Is a Lease Payoff Amount?
A lease payoff amount is the total cost to purchase your leased vehicle before or at the end of the lease term. It includes the residual value plus any remaining payments, taxes, fees, and possibly early termination charges.
This figure determines what you’ll owe if you choose to buy the car instead of returning it.
Lease Payoff Amount Meaning in Car Leasing
In leasing, the lease payoff amount reflects the current cost to buy out your lease. It’s calculated by the leasing company based on your contract and timing.
You’ll need this number if you plan to:
- Purchase the vehicle yourself
- Sell the leased car to a third party
- Finance the buyout with a lease-end loan
It’s often higher than the residual value if you’re requesting it before the lease ends because it may include:
- Unpaid monthly payments
- Early termination fees
- Sales tax (depending on your state)
- Purchase option or administrative fees
How the Lease Payoff Amount Works
Here’s how you typically get and use your lease payoff amount:
- Contact your leasing company or log into your online account
- Request an official payoff quote, valid for a set number of days
Use that amount to:
- Compare with your vehicle’s current market value
- Decide whether to buy, sell, or return the car
- Apply for lease-end financing if needed
Pro tip: Always request the payoff quote from the lessor directly, not the dealer. This will help you avoid added markups.
Lease Payoff Amount in Car Leasing Agreements
Your original lease agreement includes the residual value, which is a component of the lease payoff. However, the full payoff amount is a dynamic number that changes over time and is finalized only when requested.
You’ll typically encounter the lease payoff amount:
- In your lease-end packet
- Online via your lender’s account portal
- When considering a lease buyout or third-party sale
This number is essential if you’re exploring equity in your lease or trying to sell the car for profit.
Why the Lease Payoff Amount May Differ From the Residual Value
Many drivers are surprised to learn that the lease payoff amount is often higher than the residual value, especially if requested before the lease ends.
This difference comes from additional charges that may be included in your payoff quote, such as:
- Remaining monthly payments if you’re buying out early
- Sales tax, depending on your state’s laws
- A purchase option fee, usually $150 to $500
- Administrative or dealer charges if applicable
The residual value is the pre-set end-of-term price to buy the car. The payoff amount, on the other hand, reflects the current total amount you owe if you want to own the vehicle now.
Example: Your lease’s residual value is $17,000, but you still have four months left at $350/month. Your payoff amount may be around $18,600 when you factor in those payments, tax, and a $300 fee.
Related Terms for Lease Payoff Amount
- Prev Term: lease payment
- Next Term: lease residual value
- Related Terms: lease buyout, residual value, early termination