Car Lease Buyout Calculator — Buy or Hand It Back

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Compare the residual buyout against market value, including the disposition fee and excess mileage charges you avoid by keeping the car.

By Konstantin Iakovlev · Updated August 2026 · Source: Consumer Financial Protection Bureau — Auto loans and leases

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Total Cost to Buy

$20,075.25

Cost to Hand It Back

$1,695.00

Buying Wins By

$2,619.75

The Two Paths

Residual buyout price$18,500.00
Sales tax on the buyout$1,225.25
Total to own the car$20,075.25
Market value of the car$21,000.00
Instant equity if you buy$924.75
Excess mileage charge avoided$1,000.00
Disposition and wear charges avoided$695.00
Net advantage of buying$2,619.75

If You Finance the Buyout

Monthly payment$485.40
Total over 48 months$23,299.08
Interest paid$3,223.83

Your residual is below what the car is worth, which means the leasing company under-predicted used values when the contract was written. That equity belongs to whoever exercises the option — you, or the dealer who buys it out from under you.

Payments still owed before lease end are the same on both paths, so they are left out. Most states charge sales tax on the buyout price; a few tax the lease payments instead and give credit at buyout, so check your own rules. Excess mileage and wear charges disappear entirely if you keep the car, which is why heavy over-mileage often turns a marginal buyout into a clear one. Some leases block third-party buyouts, meaning you cannot have a dealer purchase it for you.

Use the Car Lease Buyout Calculator — Buy or Hand It Back above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

At the end of a lease you can hand the car back or buy it at the residual value printed in your contract. The remaining payments are owed on either path, so they cancel out and drop from the comparison entirely. What decides it is the residual against today's market value, plus the charges that only apply if you walk away.

The residual was set when the lease was written, three or four years ago, from a forecast of what the car would be worth now. When used values have run hotter than the forecast, the buyout price sits below market and buying captures the difference as instant equity. When they have run cooler, the leasing company absorbs the loss and handing the car back is the better deal — which is exactly the risk you paid for when you leased instead of buying.

The charges that disappear when you keep the car are the part most buyout comparisons omit, and they are frequently decisive. A disposition fee of $350 to $500 applies on return. Excess mileage is charged at 15 to 30 cents a mile, so 4,000 miles over the allowance is $600 to $1,200. Wear and tear beyond the contract standard is assessed on inspection. None of that is charged if you buy the car, so those avoided charges belong on the buy side of the ledger, not nowhere.

Two practical constraints. Most states charge sales tax on the buyout price, which can add well over a thousand dollars and is easy to forget when comparing the residual to a market value quote — a few states tax the lease payments instead and credit that at buyout, so check your own rules. And some leases prohibit third-party buyouts, meaning a dealer cannot purchase the car out from under you to capture the equity; where they are allowed, a dealer offering to buy your lease is telling you the residual is below market, which is useful information about your own option.

Example: $18,500 residual on a car worth $21,000, 4,000 miles over the allowance

  1. 1 Step 1: Total the cost to buy. The $18,500 residual plus a $350 purchase option fee, with 6.5% sales tax on both = $1,225.25 of tax, giving $20,075.25 to own the car outright.
  2. 2 Step 2: The car is worth $21,000, so buying it produces $924.75 of instant equity.
  3. 3 Step 3: Total what handing it back would cost: a $395 disposition fee, 4,000 excess miles at 25 cents = $1,000, and $300 of wear and tear = $1,695.
  4. 4 Step 4: Buying avoids all $1,695 of that, so the net advantage of buying is $924.75 of equity plus $1,695 of avoided charges = $2,619.75.
  5. 5 Step 5: Financing the $20,075.25 over 48 months at 7.5% costs about $485 a month — worth checking against what a comparable replacement car would cost to finance before deciding.

Source: Consumer Financial Protection Bureau — Auto loans and leases · Last updated: August 2026

Frequently Asked Questions

Should I buy out my lease?
Buy it when the total buyout cost — residual plus purchase fee plus sales tax — is below what the car is worth, and remember to add the disposition fee and excess mileage charges you avoid by keeping it. Those avoided charges frequently turn a marginal buyout into a clear one.
Do remaining lease payments affect the decision?
No. You owe them whether you buy the car or return it, so they cancel out of the comparison. Only the residual, the fees and the market value matter.
Is sales tax charged on a lease buyout?
In most states, yes, on the buyout price. It commonly adds over a thousand dollars and is the item most often forgotten when comparing the residual against a market value quote. A few states tax the lease payments instead and give credit at buyout.
Does buying avoid excess mileage charges?
Yes, entirely. Excess mileage and wear-and-tear charges only apply when you return the vehicle. Drivers who are heavily over their allowance often find the buyout is the cheaper option purely because of this.
Can a dealer buy out my lease for me?
Some leases permit third-party buyouts and some prohibit them. Where a dealer offers to do it, they are telling you the residual is below market value — which means the equity exists and you can capture it yourself instead.
Can I negotiate the residual value?
Rarely at lease end, since the residual is contractual. Some captive lenders will discount it when used values have fallen below the forecast, because the alternative is taking the car back and selling it at auction for less.

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