Purchase Option
Also known as: Lease Purchase Option, Lease-End Purchase, Buyout Option
A purchase option is the contractual right to buy a leased vehicle at a predetermined price (typically the residual value) at the end of the lease term. Every consumer lease includes a purchase option.
How Purchase Option Works
Your lease contract states the purchase option price — usually the residual value plus a purchase option fee ($200-$500). At lease end, you can buy the car for this amount regardless of its actual market value. If the car is worth more than the residual, buying it is a good deal. If it's worth less, you simply return the car and walk away. Some manufacturers also allow early purchase (before lease end), but the payoff will be higher because it includes the remaining lease balance. Note: some states charge sales tax on the full purchase price when buying out a lease, while others only tax the residual value.
Example
Your lease states a residual of $26,000 + $300 purchase option fee. The car's market value is $30,000. Buying at $26,300 saves you $3,700. If the market value were $23,000, you'd return the car instead.
Frequently Asked Questions
Is the purchase option price the same as the residual value?
Almost. The purchase option price is typically the residual value plus a small purchase option fee ($200-$500). Some manufacturers also add a documentation or processing fee. The exact amount is stated in your lease contract.
Can the dealer prevent me from buying my leased car?
No. Your purchase option is a contractual right. The dealer cannot prevent you from exercising it. However, some manufacturers require the buyout to go through a dealer, while others allow you to purchase directly from the finance company. Check your contract for the process.
Do I have to buy my leased car from the same dealer?
No. You can typically buy out your lease through any franchised dealer for that brand, or in many cases, directly from the manufacturer's finance company. Some people buy out their lease and then sell the car privately if the market value significantly exceeds the residual.
Related Lease Terms
Residual value is the projected worth of a leased vehicle at the end of the lease term, expressed as a percentage of MSRP.
Lease Buyout PriceThe lease buyout price is the amount you can purchase the vehicle for at the end of the lease, typically equal to the residual value plus any remaining fees.
Capitalized CostThe capitalized cost is the total amount being financed in a lease — the lease equivalent of a purchase price.
See Real Lease Deals
Compare verified lease payments from real buyers. Know what a good deal looks like before you sign.