What are your options at the end of a car lease?

If your lease is coming to an end, and you’re not sure if you should buy the vehicle or return it to the dealership, here are a few things to consider.

Buy the vehicle
Do you love the car? Is it reliable and in relatively good condition? If you’re already comfortable driving it and know what repairs will eventually be needed, you may want to buy it. Purchasing the vehicle could be a particularly good option if the residual value — the amount you’ll pay to buy the vehicle at the end of the lease — is less than its market value.

If the residual value is higher than the market value, however, buying the vehicle for more than its worth is probably not in your best interest. That being said if the return fees are extremely high because you’ve gone over the mileage limit or there’s excessive damage, buying the vehicle may save you money in the end.

Return the vehicle
If you aren’t attached to the car and it no longer suits your needs, returning it to the dealership may be your best option. Nevertheless, it’s important to do the math. For example, if the residual value is lower than the market value, you could buy out your lease and then sell the vehicle for a decent profit.

Similarly, it may be better to keep the vehicle if the lease inspection reveals damage or excessive wear and tear. That way, you won’t have to pay any extra return fees. However, having major repair work done before your lease is up could significantly reduce these fees. In addition, if you plan on leasing from the same dealership again, you could ask to have the return fees reduced or waived as part of your negotiation for a new vehicle.

As with any financial decision, it’s important to take your time and weigh your options carefully.