Lease Buyout Calculator
The contract's buyout price, and what the car is really worth
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Educational estimate only. Confirm the assumptions, current rules, fees, and rounding that apply to your situation before making a decision.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Find the residual value in your lease contract. It is the price at which you may buy the car, and the purchase-option fee is usually listed beside it. If you are buying before the lease ends, ask the lessor for a written payoff quote and use that figure instead.
- 02
Enter any lease payments still due before the buyout date and your monthly payment. At the end of the lease this is zero.
- 03
Look up what the car is worth today on Kelley Blue Book or Edmunds for its exact trim, mileage and condition, and if you can, get a written offer from a dealer. Enter that as the market value.
- 04
Add your state's sales tax rate, the title and registration costs, and what handing the car back would cost you: the disposition fee plus any excess-mileage and wear charges.
- 05
If you will finance the buyout, enter the APR and term you are quoted. Then read your equity, whether buying out beats returning, the break-even market value, and the table that runs the same buyout at six market values.
Formula
Sales tax = (residual + purchase-option fee) × your sales tax rate. Buyout price = residual + purchase-option fee + sales tax + title and fees. All-in buyout = buyout price + any payments still due. Equity = market value − all-in buyout. Buying out against returning = market value − buyout price + (disposition fee + excess-mileage and wear charges); the payments still due are owed on both paths, so they cancel. Break-even market value = buyout price − those return charges. Financed payment = the amortizing payment on the buyout price at your APR over your term, and interest = payment × term − buyout price.
Example
A lease with a $24,600 residual, a $350 purchase-option fee and two $489 payments left, on a car Kelley Blue Book values at $27,900, in a state with 6.5% sales tax and $250 of title fees. Returning it would cost a $395 disposition fee and $1,125 of excess-mileage charges. Sales tax on the $24,950 buyout price is $1,622, so buying costs $26,822, and with the $978 of remaining payments the all-in figure is $27,800, just $100 below the car's value. On equity alone the buyout barely registers. Count the $1,520 of return charges it avoids, though, and buying out is worth $2,598 more than handing the car back, with a break-even market value of $25,302. Financed at 8.9% over 48 months, the payment is $666 and the interest $5,155, which takes the cost of keeping the car to $32,955 against a $27,900 market value.
Definitions
- Residual value
- The lessor's forecast, made at signing, of what the car will be worth at the end of the lease. It sets the depreciation you pay through the lease and becomes the price at which you may buy the car.
- Purchase-option fee
- A fee some leases charge for exercising the option to buy. It is written into the contract, commonly a few hundred dollars, and is usually taxed along with the residual.
- Payoff quote
- The lessor's written figure for buying the car before the lease ends. It normally strips out rent charges not yet earned, so it can be lower than the residual plus the remaining payments.
- Disposition fee
- The charge for returning a leased car at the end of the term, covering the lessor's cost of inspecting, transporting and selling it. It is not charged when you buy the car out.
- Lease equity
- What the car is worth minus everything it costs to buy it out. Positive equity is value the lessor's residual forecast left on the table; negative equity is a loss the lessor keeps if you return the car.
Good to know
The residual is a forecast, and the buyout is where it is tested
Every lease is built on a guess about the future. At signing, the lessor forecasts what the car will be worth when the term ends, writes that figure into the contract as the residual value, and charges you for the depreciation between the price and that forecast. The same number then becomes your purchase option: the price at which you may buy the car when the lease is over. That makes the buyout a test of the lessor's forecast, and the market sets the answer. If used-car prices rose faster than the lessor expected, or the model held its value better than most, the car is worth more than the residual and the difference is yours to collect. When used-car prices rose sharply after 2020, many lessees found cars worth thousands more than their buyout price. If the forecast was too generous, the car is worth less than the residual, and that loss belongs to the lessor: you can simply hand the keys back. On the default figures the $24,600 residual is 88.2% of a $27,900 market value, so the lessor forecast the car below what it now fetches. That does not make the buyout automatically worth it, because the residual is only part of the price. The purchase-option fee, sales tax and title costs sit on top, and together they take this buyout to $26,822. The first job is therefore to price the car honestly. A website valuation for the exact trim, mileage and condition is a starting point, not cash. A written offer from a dealer or an instant-offer service is the number that tells you what the car would really bring, and it is often lower than a private-party estimate. Enter the lower figure if you are unsure. A buyout that only works at an optimistic value is not a good buyout.
Why the return charges belong in the comparison
The most common way to misjudge a buyout is to compare the buyout price with the market value and stop there. That comparison answers whether the residual is a fair price for the car. It does not answer whether you should buy it, because returning the car is not free either. Hand a leased car back and the lessor bills a disposition fee, commonly a few hundred dollars, for inspecting, transporting and reselling it. It also bills every mile over the allowance and any wear it judges excessive, such as scraped wheels, worn tires or dents beyond the lease's size limits. A buyout makes all of those charges disappear, because a car you own is never inspected for return. On the default figures the equity is only $100: the car is worth $27,900 and the all-in buyout, including two remaining payments, is $27,800. Judged on equity alone, the decision looks like a coin toss. But returning the car would cost $395 in disposition fee and $1,125 in excess-mileage charges, and once those are counted, buying out is worth $2,598 more than handing it back. The break-even moves with them. A buyout pays at any market value above $25,302, well below the residual plus tax and fees. The remaining payments work the other way. They are owed whether you buy or return, so they appear in the all-in figure and in equity but cancel out of the comparison. Leaving them in would make every early buyout look worse than it is. The practical lesson is to find out the return charges before deciding. Many lessors offer an inspection some weeks before turn-in, and its report is exactly the figure this page needs.
Sales tax, title, and who is allowed to buy the car
A lease buyout is a purchase, and most states tax it as one. The tax is charged on the buyout price, meaning the residual and usually the purchase-option fee, not on what the car is worth. On the default figures that is $1,622 at 6.5%, the largest cost after the residual itself. States do not all treat it the same way. A handful levy no general sales tax. Some tax a lease through each monthly payment, and a few of those credit that tax against the buyout. Local rates can add to the state rate. Title and registration fees then move the car into your name, and a dealer that handles the paperwork may add a documentation fee. None of this appears on a lease statement, which is why each has its own field here. The tax matters most when the plan is to sell the car rather than keep it. Buying the car yourself and then selling it can mean paying sales tax on a car you owned for a week. If a dealer buys the car directly from the lessor instead, the tax is generally part of the dealer's transaction, and the equity can come to you as a check. That route depends on the lessor. Some finance companies restrict or refuse buyouts by third-party dealers, allowing only the lessee or a dealer of the same brand to buy, and those policies have changed more than once in recent years. Ask the lessor directly and get the answer in writing before promising the car to a buyer. If the dealer route is closed, weigh the tax you would pay against the difference between a private-sale price and a dealer offer.
Financing the buyout without overpaying for it
Most people who buy out a lease do not have the residual in cash, so the buyout becomes a loan, and that loan is priced as a used-car loan rather than at the promotional rates offered on new cars. Experian's State of the Automotive Finance Market for the first quarter of 2026 puts average used-car rates at 6.30% for super prime borrowers and 21.77% for deep subprime, a spread wide enough to decide the whole question. On the default figures, financing the $26,822 buyout at 8.9% over 48 months costs $666 a month and $5,155 in interest. Kept and financed, the car costs $32,955 against the $27,900 it is worth today. That does not make the buyout wrong. You would pay interest on any car you financed, and the alternative to buying this one is usually buying another, with its own unknown history and its own sales tax. It does mean the interest belongs in the price, and that the rate is worth shopping. The lessor's finance arm will offer a loan, but banks and credit unions lend on lease buyouts too, and a pre-approval before turn-in gives you a rate to compare. Three other things change when the car becomes yours. Gap coverage that was built into many leases ends with the lease, so a loan on a car worth close to its balance may need its own. The factory warranty often ends around the time a three-year lease does, which moves repair risk onto you. And the car's history is the one advantage a buyout has over any used car on a lot: you know how it was driven and maintained, because you did it.
Frequently asked questions
Is a lease buyout worth it?
It is when the car is worth more than the buyout costs once you count what returning it would have cost. On the default figures, a $24,600 residual plus a $350 fee, $1,622 of sales tax and $250 of title fees comes to $26,822 for a car worth $27,900. Returning it would cost a $395 disposition fee and $1,125 of mileage charges, so buying out is worth $2,598 more than handing it back, even though the equity after the two remaining payments is only $100.
What does a lease buyout actually cost?
The residual value in the contract, the purchase-option fee, sales tax, and title and registration. Before the lease ends, add any payments still due, or better, use the lessor's written payoff quote, which removes the rent charge not yet earned. Purchase-option fees commonly run $300 to $500, but the contract states yours.
Do I pay sales tax on a lease buyout?
In most states, yes. The buyout is treated as a purchase and taxed on the buyout price rather than on what the car is worth. A handful of states charge no sales tax, and some credit tax already paid through the lease payments, so check with your state's motor vehicle or revenue agency before you sign. At 6.5% on a $24,950 buyout price the tax is $1,622.
Should I finance a lease buyout?
Only after shopping the rate. A buyout loan is a used-car loan, and Experian's Q1 2026 used-car averages run from 6.30% for super prime borrowers to 21.77% for deep subprime. On the default figures, $26,822 financed at 8.9% over 48 months is $666 a month and $5,155 of interest, which takes the true cost of keeping the car well above its $27,900 market value. A bank or credit union quote is worth getting before accepting the lessor's.
Why does the calculator count the disposition fee and mileage charges?
Because a buyout makes them disappear. If you return the car you pay the disposition fee and any excess-mileage and wear charges; if you buy it, you pay neither. Leaving them out would understate every buyout. The payments still due before the buyout are the opposite case: they are owed whichever way you go, so they do not change the verdict.
Can I buy out my lease and sell the car to a dealer?
Often, but not always. Some lessors restrict or refuse buyouts by third-party dealers, so a dealer that is not affiliated with your car's brand may not be able to buy the car directly. Where a dealer can buy straight from the lessor, it can avoid a round of sales tax you would pay buying the car yourself first. Ask the lessor what its current policy is before you plan around the equity.
What if the car is worth less than the residual?
Then handing it back is usually the better move, and the loss belongs to the lessor that set the residual too high. The exception is when your return charges are large: a buyout still wins as long as the car is worth more than the break-even market value, which is the buyout price less the disposition and turn-in charges. On the defaults that break-even is $25,302.