The formula
People search how to calculate lease buyout as if it were a secret. It is addition.
Residual value + remaining payments (only if you are early) + purchase-option fee + sales tax + title and registration = your buyout.
That is the whole thing. The first three come from the leasing company and the last two come from your state. Nothing else belongs in the sum. If a quote has a sixth line, it is somebody's fee, and the fee guide sorts out which of those are real.
Two small adjustments can move the total. If you paid a refundable security deposit at signing, it comes back to you and offsets the buyout. If you are buying early, some leasing companies reduce the remaining payments to strip out finance charges you have not incurred yet, and some do not. The payoff letter will show which. Ask.
Where each number lives in your contract
Pull out the lease. Not the dealer's summary sheet, the actual contract with the federal disclosures on it. The numbers are all there.
| Number | Where to find it | Notes |
|---|---|---|
| Residual value | The disclosure box, often labeled "residual value" or "purchase option price at end of term" | Fixed the day you signed. Leasing companies rarely move it. |
| Remaining payments | The payment schedule: number of payments times the monthly amount, minus the ones you have made | Zero if you are at the end of the term |
| Purchase-option fee | The purchase option paragraph, near the residual | Real only if the contract names it |
| Early termination charge | The section titled early termination | Applies only to an early buyout; read the method it describes |
| Sales tax | Not in the lease. Your state's tax or motor vehicle agency sets it | Charged on the buyout price in most states |
| Title and registration | Your state's fee schedule | Small, fixed, and real |
If you cannot find the contract, the leasing company's online account usually shows the residual and the payoff. The dealer also has a copy, but asking the dealer for your numbers invites the dealer to give you its numbers instead.
A worked example, with invented numbers
Every figure below is made up to show the arithmetic. Yours will be different.
Say the residual is $18,000. Say the purchase-option fee is $300. Say you are in the last month, so there are no remaining payments. Say your state's sales tax on an $18,300 purchase comes to $1,200. That is a pretend figure, not a rate; find the real rate from your state's tax or motor vehicle agency. Say title and registration come to $150.
- Residual: $18,000
- Remaining payments: $0
- Purchase-option fee: $300
- Sales tax: $1,200 (hypothetical)
- Title and registration: $150 (hypothetical)
- Buyout: $19,650
Now the early version. Say you have four payments of $400 left, and the leasing company does not discount them. Add $1,600. The cash buyout becomes $21,250, before any early termination charge the contract names. You are not paying more for the car. You are paying the rest of the lease up front. The early buyout guide explains when that is worth doing and when it is not.
Notice what the leasing company actually finances in your head versus what you have to pay. The payoff letter covers the first three lines, $18,300 in this example. The tax and the title are yours to find. A loan that funds only the payoff leaves you writing a check for $1,350 at the DMV. A loan that funds the whole buyout does not. Ask any lender which one it is before you apply.
Now compare it to the market: your equity
The buyout tells you what the car costs. It does not tell you whether to buy it. For that you need what the car is worth, and the honest way to get it is three numbers from the pricing guides: the private-party value, the trade-in value, and the retail asking price for the same year, trim and mileage near you.
Equity is the private-party value minus the payoff. In the example, if a private buyer would pay $22,000 and the payoff is $18,300, there is $3,700 of equity in the car before tax and title. If a private buyer would pay $16,000, the equity is negative by $2,300, and the leasing company's residual guess was high. Both answers are useful. The decision that follows from each is in should I buy out my lease.
What the buyout does not include
Mileage overage and wear charges are return charges. If you buy the car, nobody counts your miles and nobody inspects your bumper. The disposition fee is also a return fee, and most contracts waive it on a purchase. If any of those three appear on a buyout quote, someone copied the wrong column.
Why the dealer's number is bigger
Ask the leasing company what is my lease buyout and you get one number with an expiration date. Ask the dealer what is the buyout on a car lease and you get a larger one. The gap is not mysterious.
- A doc fee, for paperwork the leasing company's payoff package already contains.
- An inspection fee, for inspecting a car you are buying as-is.
- Add-ons on the buyer's order that nobody asked for.
- Sometimes a markup over the residual, if the dealer buys the car first and resells it to you.
- If the dealer arranges the loan, a rate with the dealer's compensation built in, which you will never see broken out.
None of that is your buyout. It is the cost of doing the buyout in the most expensive room available. The arithmetic in this guide is what the car costs. The dealer's sheet is what the dealer costs.
The one-line rule. Your buyout is the leasing company's payoff letter plus your state's tax and title. Anything above that on a quote is someone's fee.
The payoff letter beats your arithmetic
Your calculation is for deciding. The leasing company's payoff letter is for paying. It is the binding number, it has a good-through date, and it names a per-day charge for every day after that date. Get it directly from the leasing company, as the lessee, and check it against your own sum. If the two disagree, ask which line moved. Usually it is the purchase-option fee, a payment that posted late, or a discount on remaining payments you did not expect.
If you want to figure out lease buyout numbers quickly, do it in this order: residual from the contract, payoff from the leasing company, tax and title from the state, market value from the guides. Four calls, one afternoon, and you will know more than the dealer wants you to.
The short version
A lease buyout is residual plus any remaining payments plus the purchase-option fee, with your state's tax and title on top. Everything you need is in the contract and on the state's fee schedule.
Compare that total to the private-party value to see your equity, then get the payoff letter from the leasing company to make it official. Treat any number above the letter plus tax and title as a fee you have not agreed to.
Quick answers
What is my lease buyout amount?
The residual value in your contract plus the purchase-option fee, plus any remaining payments if you are early, plus your state's sales tax and title fees. The leasing company's payoff letter gives the official figure for the first part.
Is the buyout the same as the residual?
No. The residual is the price of the car. The buyout adds the purchase-option fee, sales tax, title and registration, and any remaining payments if you buy before the term ends.
How do I know if I have equity in my lease?
Compare the private-party value of the car to the payoff. If the car is worth more than the payoff, that gap is your equity. If it is worth less, you have negative equity and should think carefully before buying.