How a Toyota Lease Buyout Works
Tired of leasing your RAV4? Ready to own that Camry? A Toyota lease buyout might be your perfect path to ownership.
Written by R.E. Fulton
Reviewed by Jessica Barrett
If you’ve fallen in love with your
Toyota RAV4
or Corolla
lease, you can purchase your vehicle with a Toyota lease buyout. But be cautious—if the car needed a lot of repairs during your lease term, negotiating a good deal gets a lot harder. Leasing is becoming a more popular option for drivers today, and it’s no wonder: for a lower average monthly payment, leasing lets you drive a great car without any of the headaches of ownership. But when you decide you’re ready for that long-term commitment, a lease buyout lets you keep your leased vehicle.
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What is a lease buyout?
If you’re new to leasing, here’s what you need to know about lease buyouts. Simply put, a lease buyout lets you purchase your leased vehicle for its remaining value instead of returning it at the end of the lease period. The “residual value” of the leased car is calculated at the beginning of the lease term based on expected depreciation.
There are two main types of lease buyout:
- Lease-end buyout: This is the most common kind of buyout. Once the period in your contract expires, you’ll have the option to negotiate a purchase instead of turning the car in and starting a new lease.
- Early lease buyout: You don’t have to wait until the end of your lease to buy your vehicle—but buying out your lease early comes with some challenges.
How a Toyota lease buyout works
If the end of your lease is approaching and your heart’s set on keeping your Toyota, here’s what you need to do:
- Check your lease contract and monthly statement. Your monthly statement may list a “payoff amount.” If not, look in your contract for the stated residual value. These figures will help you estimate how much you’d have to pay to buy out your lease.
- Request a payoff quote. For an exact number, log onto your Toyota Financial Services (TFS) account or call 1-800-286-0652 for a buyout quote.
- Get pre-approved for financing. The dealership where you leased the car may offer financing, but it’s a good idea to compare offers from at least three lenders, including banks and credit unions.
- Negotiate a lease buyout with your Toyota dealer. Having financing pre-approval will help you bargain confidently for a good deal.
- Don’t forget to factor in registration and insurance fees. Once you’ve signed on the dotted line to purchase your Toyota, you’ll need to pay for a title transfer,vehicle registration, and, of course, insurance!
And just like that, your vehicle is yours for life! Now that you’re a proud Toyota owner, it’s time to start learning about maintenance so you can keep that vehicle in peak shape for years to come.
Will Toyota finance a lease buyout?
You can work with your local Toyota dealer and Toyota Financial Services to finance your lease buyout, but it’s not necessarily the best deal. Before you accept any offer, compare at least three financing offers from different lenders.
Why? Dealerships are often motivated to charge you more, while credit unions and banks may offer you slightly better terms based on an existing relationship or overall lower rates. It’s always worth comparing rates to find out where your profile fits the best.
MORE: 5 reasons you should consider an auto loan from a credit union
Is a Toyota lease buyout worth it?
If you’re leasing a Toyota that you’d like to own, a lease buyout might look like the perfect option—but don’t rush into paying off a lease until you’ve crunched the numbers and weighed all of your options.
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How to calculate Toyota lease buyout fees
You can call Toyota Financial Services for a payoff quote—but if you’d rather not get on the phone, there’s a fairly easy way to calculate Toyota lease buyout fees.
Start by looking up your leased vehicle’s residual value. It should be listed in your contract, since that figure is estimated at the beginning of the lease term. Once you’ve got that number, use an online service to estimate your vehicle’s actual value.
Now compare those two numbers. Ideally, you want the actual value of your leased Toyota to be higher than the residual value. That means your vehicle’s kept more of its value than anticipated, and it puts you in a strong position when it comes to negotiating a lease buyout.
But let’s say the actual value of the car is much lower—maybe you’ve put a lot of mileage on the car, driven it in rough conditions, or been in an accident or two. In this case, a lease buyout may not be the best idea, since you could end up paying extra to cover the difference between the actual and residual value.
MORE: How to calculate a car lease payment
When it’s better not to buy out a Toyota lease
Buying out your Toyota lease might not be worth it if:
- Your leased Toyota has been in multiple accidents, required frequent repairs, or lost a significant amount of value since the start of the lease
- You’d prefer a different model or more recent model year
- You can’t get approved for a low interest rate
Sometimes a lease buyout just isn’t meant to be. If you’re in any of the above situations, consider turning in the vehicle and starting a new Toyota lease, or simply returning the car and buying a different vehicle outright. Waiting to buy out your lease gives you time to build your credit score so that you can get a better deal on any payoff fees.
How to save on Toyota insurance
Shopping for financing offers is an important step in any Toyota lease buyout—and it can be time-consuming! But shopping for Toyota insurance doesn’t have to be.
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