Your Jeep lease is nearly up, and you’ve come to accept what’s true: you want to keep your ride. Hey, it’s understandable. And you can do just that. But before you decide to negotiate a deal on a lease buyout, you must learn how the process works. That includes understanding residual value and how that figure’s determined. Read on for that and more.
Explain Lease Buyouts
Essentially, such a buyout permits you to buy your leased Jeep for its remaining value, which is also called “residual value.” This value is figured at the beginning of your lease and is based on how much vehicle depreciation is expected to occur during the lease period.
Depreciation is the rate at which a vehicle loses value from the first year it’s bought. In fact, what you may have heard is true: the price of your new car decreases as soon as it’s driven off the dealer’s lot.
Some people opt to buy their car even before their lease is up, by the way. However, lease-end buyouts are more common. Rather than turning in the vehicle when the lease is up, buyers can often negotiate a purchase.
Jeep Buyouts
Not every lease works the same, so we’ll focus on Jeep and the Chrysler Group. You can use the Chrysler website to apply for lease-end financing or call 855-383-0558. If you go this route, you’ll have to download from the website a Leased Odometer Disclosure Notice and Statement and mail it to Chrysler Capital, P.O. Box 961275, Fort Worth, Texas, 76161.
Another, perhaps easier option is letting your dealer handle the lease buyout. They’re certainly more familiar with the process. Rather than reaching out to Chrysler, just talk over your options with your dealer. One proviso, though, is that in exchange for ease and convenience, you may wind up shelling out more due to added fees than you would by going directly to Chrysler.
Can a Lease Buyout Be Beneficial?
Sure, it may be worth it to buy out your lease. Just be sure to run the numbers to be certain that it’s the right move for you.
You need a payoff quote, and the easiest way to secure one is by contacting your dealer or Chrysler. However, you can also do your own math. In that case, the first thing you need to do is look at your lease agreement and find your vehicle’s residual value. Then you must go online to estimate your Jeep’s actual value. After you do that, compare the two numbers.
Residual Value
As we say, a leased vehicle’s residual value is what the leasing company anticipates the vehicle will be worth at the lease contract’s end. The figure is what the vehicle will cost if you want to buy it when the lease is up. It’s also part of how monthly lease payments are calculated.
Your vehicle’s residual value was determined by considering factors including market conditions and the ride’s resale value, safety, and reliability. Gas price stability, new technology, and the overall economy can also influence residual value.
Such value can be expressed as a price percentage. For instance, if the value is put at 65% of the vehicle’s initial price, the residual value of a $60,000 vehicle would be $39,000.
What if Your Vehicle’s Actual Value is Lower Than Its Residual Value?
If the actual value of your leased ride markedly exceeds its stated residual value, you’re sitting pretty, in terms of negotiating a deal on your buyout.
However, if your vehicle’s actual value is substantially less than the residual value, you may want to pass on a buyout, and consider Jeep lease deals instead. Your vehicle’s value may be reduced by excessive mileage, accidents, or damage caused by driving in rough conditions.
Ultimately, what residual value means and how it’s determined goes to the heart of whether it behooves you to purchase the vehicle you’ve fallen in love with over the course of your lease agreement. It may make more sense – and cents – to sign a lease on a new Jeep, which you may end up enjoying more. Work your numbers and see what’s best for you.
