Did you lease your Tesla before April 15, 2022? If so, you may be able to buy out your lease. Just be sure to compare your Tesla’s residual and actual values before you do.

Leasing is a great way to enjoy a fantastic car while maintaining a low monthly payment. It also frees you from all the burdens of car ownership. But what if your lease term is coming to an end and you want to keep your car? In that case, a lease buyout may be the right move for you!

Never bought out a lease before? Need a refresher? Not to worry!

Jerry

, the

car insurance

comparison tool and super app, has created a guide on how to buy out your Tesla lease. Then we'll show you the fastest way to save more on your

Tesla insurance costs

What is a lease buyout?

The lease buyout process is fairly simple. A lease buyout is when you purchase your leased car for its remaining, or “residual value.”

When you first lease your car, it’s worth a certain amount of money. Over time, your car is worth less due to depreciation. Residual value is your car’s worth at the start of your lease term minus depreciation losses over the course of your lease term.

Lease buyouts fall into two main categories:

Lease-end buyout: When people talk about lease buyouts, they’re typically referring to lease-end buyouts. In a lease-end buyout, you wait until the term of your lease is over, then purchase the vehicle for its residual value.

Early lease buyout: While a little more complicated than lease-end buyouts, early lease buyouts allow you to purchase your leased car before the term of your lease is over.

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MORE:

Is it better to lease or buy a car?

How a Tesla lease buyout works

Let’s say the term of your Tesla lease is nearing its end and you want to keep your car. Here’s what you need to do:

Determine your eligibility: Only Tesla drivers who leased their cars before April 15, 2022, can buy out their leases. Third-party dealerships and third-party individuals cannot buy out their leases.

Model 3

and

Model Y

leases cannot be purchased.

Check the fees: A $350 purchase fee applies to Tesla vehicles leased after April 13, 2019. Local taxes and fees also apply.

Request an estimate: You can request an estimate through your Tesla account or the Tesla app. You will need to provide your registration address and title assignment before Tesla will provide you with an estimate.

Confirm your intent to move forward: The lease buyout process can be completed through the Tesla app. Once you have confirmed your intent to buy out your lease, Tesla will prepare a purchase packet for you. A vehicle inspection may be required depending on local regulations.

Send payment to Tesla: As soon as Tesla receives your payment for the full estimated amount, they will process your purchase and transfer your car’s ownership documents over to you.

Congratulations! You are a proud Tesla owner. Now that you officially own your car, you should also shop for

car insurance quotes online

MORE:

Tesla’s bold new plan for car insurance

Will Tesla finance a lease buyout?

You may be able to finance your lease buyout through your local Tesla dealer or Tesla Financial Services. However, it may be more expensive.

Dealerships often seek to maximize their profits by charging you higher interest rates. Therefore, you should also shop for financing at banks and credit unions. Odds are, you’ll be able to find much better rates than what Tesla will offer you.

Is a Tesla lease buyout worth it?

Buying out your Tesla lease may sound exciting, but make sure you do all the math and consider all of your options before committing.

How to calculate Tesla lease buyout fees

Tesla makes obtaining a payoff quote very simple with its online services and app. However, you can crunch the numbers yourself fairly easily.

First, check your car’s residual value. Your car’s residual value is calculated at the start of your lease term, and you should be able to find it listed on your contract. Then, estimate your car’s actual value using an online service.

Ideally, your car’s actual value will be higher than its residual value. That means your car is worth more than anticipated, and you will be in a strong position when negotiating a lease buyout.

If you’ve driven your car more miles than anticipated or been in a car accident or two, your car’s actual value may be lower than its residual value. In that case, a lease buyout may not be the best idea, as you may be required to cover the difference.

MORE: How to calculate a car lease payment

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

You probably shouldn’t buy out your Tesla lease if:

You want a newer car or a different model

You can’t obtain approval for a low interest rate

You’ve driven your Tesla more miles than anticipated, driven it in rough conditions, or been in car accidents necessitating expensive repairs

If you fall into any of the above categories, you may want to wait until the end of your lease term and then turn in your car. This will allow you more time to build up your credit score and afford you the options of buying a different car or leasing a newer Tesla.

MORE: How does your credit score affect car insurance?

How to save on Tesla insurance

Buying out your Tesla lease may be a smart move, but it can be time-consuming and frustrating. Do you want to know what’s not time-consuming and frustrating? Shopping for

car insurance

with

Jerry

Jerry is the #1 insurance app in the App Store for a reason. Download the Jerry app, enter your information, and in less than 45 seconds you will be provided with a selection of top quotes drawn from a pool of over 50 of the nation’s leading insurance providers. All you need to do then is pick your policy. It’s that simple!

Jerry drivers save an average of over $800 per year on car insurance.