As long as you have a Red Carpet Lease agreement with Ford, you should be able to purchase your leased vehicle. Be sure you calculate your Ford’s residual and actual values before committing.

Buying a car can net you large monthly payments and numerous headaches. Leasing your car frees you of those burdens. Besides, if you do decide that you want to purchase your leased Ford, you may still be able to down the road.

Don’t worry if you haven’t leased (or purchased) a car before.

Jerry

, the

car insurance

comparison app, is here with an explainer on how to buy out your Ford lease. (We can also drop some knowledge about saving big on your

Ford insurance cost

What is a lease buyout?

A lease buyout is what it sounds like. In a lease buyout, you purchase your car for its “residual value.” Residual value is calculated by taking the value of your car at the beginning of your lease term and subtracting depreciation losses. The further you are into your lease, the lower your car’s residual value.

There are two types of lease buyouts:

Lease-end buyout: This is the most common form of lease buyout. You wait for the term of your lease to end, then purchase your vehicle for its residual value.

Early lease buyout: A tad more complicated than lease-end buyouts, early lease buyouts allow you to purchase your leased car before the term of your lease has expired.

MORE:

Best car insurance for Ford Bronco Sport

How a Ford lease buyout works

If you have a Red Carpet Lease agreement with Ford and you want to purchase your leased vehicle, here’s how a Ford lease buyout works.

Check your purchase option price: The purchase option price at the end of your lease is included in your Red Carpet Lease agreement. If you are attempting to purchase your Ford before the end of your lease, you can log into your Ford account manager or contact Ford customer support to obtain a purchase option price.

Talk with your Ford dealer: Your Ford dealer will be able to explain your purchase options, clarify the final purchase price as well as any taxes or fees, and set up your appointment to buy out your Ford lease on or before the date of your lease’s expiration.

Purchase your leased vehicle: Before purchasing your leased Ford, you must satisfy any remaining financial obligations, review and sign the Odometer Statement, and provide all necessary funds. Ford will then transfer the vehicle’s ownership to you.

If you have moved and it is no longer convenient to visit your original Ford dealer, you may return or purchase your leased vehicle through another Ford dealership. Contact Ford customer support if you are unable to locate a participating Ford dealer.

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Will Ford finance a lease buyout?

Your local Ford dealership or Ford Credit can finance your lease buyout, but they will likely charge higher rates than banks and credit unions.

Car dealerships aim to extract the maximum possible profit from their financing agreements. Banks and credit unions, especially those with which you already have a relationship, will likely offer you better terms. Make sure you obtain multiple quotes before committing to a financier.

Is a Ford lease buyout worth it?

Don’t rush into a lease buyout agreement. Make sure you crunch the numbers first and determine if a buyout is actually to your benefit.

How to calculate Ford lease buyout fees

You can obtain a payoff quote from Ford using your account manager or by contacting Ford customer service. However, you can actually figure it out yourself using a simple “back of the envelope” calculation.

First, you need to determine your car’s residual value. You should be able to find your car’s residual value on your lease agreement. Next, you need to calculate your car’s actual value. This can be accomplished using an online service.

If your car’s actual value is higher than its residual value, a lease buyout may be an excellent option. Since your car has retained more of its value than anticipated, your negotiating position is much stronger.

If your car’s actual value is less than its residual value, either due to accidents or excess miles, you should probably reconsider committing to a lease buyout. As your car is worth less than expected, you may be on the hook for covering the difference between its residual and actual values.

MORE: How to calculate a car lease payment

When it’s better not to buy out a Ford lease

Don’t buy out your Ford lease if you fall into one or more of the following categories:

You desire a different car or a newer model year

You have a

low credit score

Your car has been driven in rough conditions or has been in accidents necessitating expensive repairs

You drove your car more miles than anticipated

Sometimes the best option is to just wait until your lease expires. This allows you more time to build up your credit score. Plus, it affords you the option of purchasing a different car or leasing a newer Ford.

MORE:

Is it better to lease or buy a car?

How to save on Ford insurance

Whether you decide to buy out the lease on your Ford or wait for it to expire, you can always shop and save on your car insurance with

Jerry

Jerry brings car insurance shopping fully into the digital age. With our

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On average, Jerry users save over $800 per year on car insurance.

“I was tired of looking around multiple websites, so I decided to give
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Find out if you can reduce your monthly car payments in minutes

* checking your rate won’t affect your credit score

Check your rate

* checking your rate won’t affect your credit score

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