Every lease ends with the same fork: hand back the keys or buy the car you've been driving. The answer isn't a feeling about the car — it's one subtraction. Here's the formula, the fees that sneak in, and the two worked examples that show when each answer is right.
Buyout equity = market value − (payoff + purchase-option fee + sales tax + title/registration).
The payoff is your residual value plus any remaining payments; your lender's automated line will quote it to the penny. The purchase-option fee runs $0 to $500 (most brands are near $300). Sales tax applies to the payoff in most states, and title and registration run $50 to $250 like any used-car transfer.
Positive equity means buying wins, either because you want the car or because you can resell it for the spread. Negative equity means return it — your only exit cost is the $300 to $500 disposition fee plus any excess wear or mileage charges.
Example 1: equity. Three-year-old SUV, payoff $18,500, market value $21,500, purchase fee $300, tax 6%, DMV $150. Tax hits the payoff plus fee: 6% × $18,800 = $1,128. All-in: $18,500 + $300 + $1,128 + $150 = $20,078. Equity: $21,500 − $20,078 = +$1,422. Buy it, or flip it and pocket the difference.
Example 2: no equity. Same structure but the payoff is $14,200 with 8.25% tax and $200 in fees, and the car is worth $13,800. All-in: $14,500 + $1,196.25 + $200 = $15,896.25. That's $2,096.25 underwater, versus a $400 disposition fee to walk away. Returning wins by roughly $1,700.
KBB and Edmunds give you an estimate range, but a firm offer is better, because it's a number someone will actually pay. CarMax and Carvana appraise free in minutes, and increasingly both will buy out leases directly — the retailer pays your lender the payoff and writes you a check for the surplus. On Example 1, that's the $3,000 gap between their $21,500 offer and the $18,500 payoff, no financing, no sales tax in most states (you generally pay tax only when you register a car you keep; the retailer handles its side).
One caveat: lenders vary. A few prohibit third-party buyouts or only deal with licensed dealers, so call before you schedule the appraisal. Get two offers regardless — the spread between retailers on the same car is regularly a few hundred dollars.
| Fee | Range | Charged when |
|---|---|---|
| Purchase-option fee | $0 – $500 | Always, at buyout |
| Sales tax on payoff | 0 – 10.5% | Most states, at buyout |
| Title & registration | $50 – $250 | At buyout (same as used-car transfer) |
| Disposition fee | $300 – $500 | Only if you RETURN the car — waived when you buy |
| Excess wear / mileage | $0.15 – $0.35 per mile | Only if you return over miles or with damage |
| Documentation fee | $75 – $300 | Dealers and some third-party services |
People forget the disposition fee cuts in your favor: it disappears when you buy. And returning isn't free either — the fee plus mileage charges is the number buying has to beat, not zero. Budget the registration cost for your state before you sign anything, since that line varies from about $15 in some states to several hundred in others.
If you're keeping the car, a used-auto loan on the payoff is usually the cheapest money available — the $18,500 payoff at 7.5% for 48 months is $447.31 a month. Compare that against what the payment on a comparable replacement would be with the auto loan calculator; you'll often find the buyout payment is lower simply because you're financing a used car you know the history of. Cash skips roughly $2,970 of interest on that 48-month loan, but only tie it up if you're not draining the emergency fund for it.
One wrinkle worth knowing: buyout loans are used-car loans, and lenders cap them against book value. If your payoff is far above market (negative equity), financing a buyout can require cash down to cover the gap — another nudge toward just returning the car.
Enter payoff, market value, fees, and tax. Get your buyout equity, all-in cost, and the return-instead comparison in one screen.
Lease Buyout Calculator →Early buyout = remaining payments + residual + the same fees, which almost always lands above market value because the lender hasn't collected its full rent yet. Early termination quotes add penalties on top. The exceptions are lease-transfer-friendly situations and cars with accident-free history you can't replace cheaply. For everyone else, waiting to the scheduled end protects you — and if you're still shopping, the lease vs buy calculator settles the decision before you sign, not after.
Lease-end windows are typically 30 to 90 days, and payoff quotes have expiration dates, so refresh the numbers the month you decide. Tax treatment and third-party buyout rules vary by state and lender — confirm the details with yours before relying on the general math here.
Only when the car's market value exceeds your all-in buyout cost: payoff plus purchase-option fee, sales tax on the payoff, and title and registration. On an $18,500 payoff with a $300 fee, 6% tax, and $150 in DMV fees, all-in is $20,078 — buy if the car is worth more than that, return it if it's worth less.
Often, yes. Some states and most big lenders allow third-party buyouts: the retailer pays your lender the payoff and pays you any surplus. If CarMax offers $21,500 on an $18,500 payoff, you capture roughly $3,000 minus the retailer's fee without financing anything. Check with your lender first, because a few prohibit third-party purchases or restrict them to licensed dealers.
You return it and let the lessor absorb the loss. Your cost is the disposition fee ($300-$500) plus any excess wear and mileage charges. Never exercise a buyout below market value out of loyalty or convenience — that gap is the lender's problem, and paying it voluntarily is donating money to a bank.