When your GM vehicle lease is nearing its end, one of the most important decisions you’ll face is whether to return the car or keep it. For many lessees, buying out the lease makes financial sense, especially if the vehicle is in good condition and the buyout price is lower than its current market value. The GM Financial lease buyout option gives you the opportunity to own your leased vehicle outright, and understanding how it works can help you make an informed, confident decision.
What Is a GM Financial Lease Buyout?
Definition and Purpose
A GM Financial lease buyout refers to the process where you, the lessee, purchase the vehicle you have been leasing from GM Financial. This typically occurs at the end of the lease term, though some agreements allow for an early buyout as well. The buyout involves paying a predetermined amount, known as the residual value, plus any applicable fees and taxes.
Who Should Consider a Lease Buyout?
Choosing a lease buyout is ideal for individuals who:
- Have taken good care of the leased vehicle and want to keep it
- Are facing excess mileage charges or wear-and-tear penalties if they return the car
- Believe the market value of the vehicle is higher than the buyout amount
- Prefer owning a known vehicle rather than starting a new lease
Steps to Buy Out a GM Financial Lease
1. Review Your Lease Agreement
Before deciding, go through your original lease contract. It should clearly state the residual value the amount you’ll need to pay if you choose to buy the car. This figure was determined at the start of the lease and is based on the expected depreciation of the vehicle.
2. Contact GM Financial
Reach out to GM Financial to get a current buyout quote. This quote includes the residual value, plus any outstanding lease payments, taxes, or administrative fees. You can also request the payoff amount through your online GM Financial account or by calling customer service.
3. Evaluate the Vehicle’s Market Value
Compare the lease buyout amount to the car’s current market value using valuation tools or dealerships. If the market value is significantly higher, buying out the lease could be a smart investment.
4. Secure Financing (If Needed)
If you don’t plan to pay cash for the lease buyout, you’ll need to obtain financing. This can be done through GM Financial or an outside lender like a bank or credit union. Compare interest rates, terms, and fees to find the best deal.
5. Complete the Purchase
Once you’re ready, finalize the paperwork with GM Financial. You may need to visit a dealership to process the buyout. After payment is made, you will receive the title or certificate of ownership, making you the legal owner of the vehicle.
Early Lease Buyout Option
Can You Buy the Car Before Lease Ends?
Yes, GM Financial allows early lease buyouts in many cases. However, the cost may be higher than waiting until the end of the lease, as you may need to cover the remaining payments along with the residual value and fees.
Why Choose an Early Buyout?
- You want to avoid mileage penalties
- The car’s resale value is rising, and you want to secure ownership
- You plan to sell or trade the car immediately after the buyout
Risks of Early Buyout
Make sure the early buyout price is financially reasonable. Sometimes, it can be more expensive than completing the lease term. Always run the numbers before deciding.
Costs Associated with Lease Buyout
Common Fees and Charges
The total lease buyout cost may include:
- The residual value of the vehicle
- Any remaining monthly lease payments (for early buyout)
- Sales tax based on your state or region
- Buyout processing or administrative fees
- DMV registration and title transfer fees
Optional Costs
If you’re financing the buyout, additional costs such as loan interest and lender fees should be considered. Also, you may want to invest in extended warranties or maintenance plans if the original coverage is ending.
Advantages of Buying Out Your GM Lease
Ownership and Equity
Once you complete the buyout, you become the full owner of the vehicle. This means you can build equity in it, which is an advantage over leasing where you never own the asset.
Familiarity with the Vehicle
You already know the condition, history, and performance of the vehicle, reducing the risks of purchasing a used car from a third party.
Avoiding Lease-End Fees
Lease return often comes with potential fees for excess mileage, wear and tear, and disposition. A buyout can eliminate these costs entirely.
Freedom to Sell or Trade
Once the car is yours, you can sell or trade it at any time. If its market value is higher than the buyout price, you could even make a profit.
Disadvantages and Things to Consider
Out-of-Pocket Expense
Lease buyouts can require a large upfront payment, especially if you’re not financing. This may not be ideal for those with limited cash flow.
Potential for Overpayment
If the market value of the car is lower than the buyout amount, you may end up overpaying. It’s essential to assess market trends before committing.
No Warranty Coverage
If the original warranty has expired, any repairs or maintenance after the buyout are your full responsibility, unless you purchase additional coverage.
Tips for a Smooth GM Lease Buyout
- Start researching your options a few months before the lease ends
- Check your contract for exact terms and fees
- Get a pre-approved loan to compare financing options
- Have the car inspected to ensure it’s worth keeping
- Negotiate fees or dealer charges if possible
Choosing a GM Financial lease buyout can be a wise move if the numbers make sense and the vehicle meets your long-term needs. It provides flexibility, the potential for ownership, and freedom from recurring lease payments. By understanding the process, evaluating your car’s value, and comparing financial options, you can make an informed decision that fits your lifestyle and budget. Always consult your lease agreement and speak with GM Financial representatives to clarify any concerns before moving forward with the buyout.