Preparing To Obtain An Auto Loan After Your Lease Expires
If you really love your vehicle and wish to continue to drive it well past the lease turn in date, you may have the option to buy it. Purchasing the vehicle outright after a lease term allows you to hang on to the vehicle and not have to worry about strict lease restrictions such as mileage and overall wear and tear. To prepare, here are a few things to consider before making the final decision.
Choosing The Right Lender
When you first signed your lease agreement, there was a lender, typically though the manufacturer of your vehicle, who approved the terms of your lease. This is the company that you make your payments to and correspond with regarding issues with your vehicle. Generally, they will offer you a very comparable finance offer to purchase the vehicle after the lease expires. It's often as easy as signing a few documents. Also be aware of a purchase-option fee. This amount can be a few hundred dollars, but if you're wanting to keep your car, you'll have to pay the fee. You can also choose your own bank or another lender to finance the vehicle through. Check around to find the best rate and loan terms for your purchase.
Obtain Your Credit Report And Score
One of the main things that your lender will look for before they approve you for an auto loan refinance is what your credit worthiness is. This starts by running a merged credit report from all three bureaus:
- TransUnion
- Equifax
- Experian
The triple report will show if you have any outstanding debt and focus in on your overall payment history. In addition, you should run your credit or FICO score. Scores over 650 are favorable for getting loan approval and the best interest rate for your loan.
Check The Car's Blue Book Value
Even if you've kept your vehicle well below the maximum miles required for your lease, it's best to check the overall value, to make sure you're taking on a good investment. As long as your vehicle's exterior and interior is in good condition, miles are low and it's in good mechanical shape, the value should be high. If you've had a lot of mechanical issues or the vehicle hasn't lived up to your personal expectations, it may be time to turn the car back in when the lease is over.
Monthly Payment
Used car loan rates vary greatly depending on many factors including:
- Year and condition of vehicle
- Your credit score and credit history
- Desired loan length
- Down payment
All of these factors go into determining what your monthly loan amount will be. If you stay with your existing lender, the payment will likely be lower than the lease payment, unless you choose a shorter loan term.
Purchasing your leased vehicle is a great financial option if you choose to remain in it after your last lease payment. Consider the best option for you financially so you can continue to drive the best car for your lifestyle.