Leased car rates are up. This could be an indication of financial stress for some car owners. No matter what your situation, you may be wondering if you can refinance a leased car. Let’s find out…
Want to lower your auto refinance monthly payment? Get a free refi quote from CARCHEX today.
More Leases Than Ever
According to Forbes, more new car owners are leasing, and auto leases now represent around 27% of all new car transactions. This is the highest it has been since 2006, and this trend may not be positive. It’s possible that some car owners are overspending on vehicles they really can’t afford.
When you lease a car, you make payments based on the value of the use of the car. For example, if your car’s value loses $5,000 over your three year lease, you pay $5,000 over the lease term. The upside is that you might make lower monthly payments leasing compared to buying. The downside is that once the lease is over, you have nothing to show for it since you never owned the car.
Leases also may have mileage limitations and requirements for maintenance which can drive up costs. Finally, most leases also have an early termination fee.
You might be able to replace your current lease with a new one. Before you sign, however, check if your current lease has an early termination fee. This may offset any savings found with a new lease.
Buy The Car
You might consider buying the car. How? By refinancing the purchase. You do this by asking for the lease payoff amount. This number represents your payment to the dealer in order to purchase the leased car outright. Many leases come with this option.
Once you have the payoff amount, you can shop around for a car refinance loan. After you pay off the lease with the loan, you’ll begin making payments on the new loan.
You’ll need to do some comparisons, such as your monthly payment when refinancing vs. leasing. Remember, to include the lease early termination fee in your calculations.
Once you begin this process, be aware of timing. Lease payoff amounts are subject to change and typically expire within a month. Later we’ll show you one of the fastest ways to compare.
Advantages To Refinancing Car Leases
The main advantage to buying out your lease is that you become the car owner. This means you’ll be able to sell the car, and you’ll be free from mileage restrictions. However, getting a refinance loan to payoff a car lease is not always easy, so you’ll have to do some shopping around.
The most efficient way to find the best refinance deal is often through a refinance network, such as CARCHEX. One big advantage here is speed. With a refinance network, you’ll request bids from multiple lenders all at once through an automated system. Making these requests on your own could take weeks.
Also, with a refinance network, multiple lenders are directly competing for your business. This level of competition tends to drive down interests rates which is to your advantage.
Find out if you can payoff your lease with auto refinance from CARCHEX. Get a free quote now.
Published in CARCHEX Auto Finance Resources by CARCHEX on January 8, 2016