Community Manager
Community Manager

USAA Community Car Lease is Up Now What.jpg

Leases make up a larger and larger share of the market. According to Experian’s State of the Automotive Finance market in the final quarter of 2018, roughly 29% of all new vehicles were leased; up more than 50% since 2010. And that means more and more people are faced with a decision on what to do when their lease ends. Generally, you have three options: turn-it in, trade-it in or buy it.


Here are four questions to ask yourself if the clock is ticking down on your vehicle lease:


  • What’s my lease say? Yes, it’s finally time to break out that multi-page document and dig into the details. Why? Those details may influence your decision or, at the very least, factor into the feasibility and acceptability of your options. How many miles were allowed? Is there a lease termination fee? Is there a “beyond normal wear and tear” damage allowance? While all of this fine print could influence your decision, perhaps the most important question is…

  • Where do I stand relative to the residual value? With a closed-end lease, your residual value is the contractual purchase price of the vehicle at the end of the term. Your lease was structured so that this residual value would equal the market value of the vehicle at the end of the lease. However, those projections are not always on the money. If your vehicle is worth more than the residual value, that could provide an opportunity to use your positive equity to help buy or lease a new vehicle or even cause you to consider purchasing the vehicle and reselling it. If the residual value is more than the fair market value of the vehicle, it may make sense to turn in the vehicle. Online resources like or can give you a sense of where you stand. For example, let’s say the purchase price (capitalized cost, in lease parlance) was $25,000 two and a half years ago when you took out the lease and the residual value in the contract was $19,000. Today, as you’re looking at your lease end options, the market value of the vehicle is $15,000. In a scenario like this, you may want to consider turning in the vehicle.

Lease Buy Out

If you like your leased vehicle, USAA can help you buy it. Learn More.


  • Lease or buy my next car? It’s time to work through the buy vs. lease decision again. However, this time you have experience on your side. How did the lease work for you? With 20/20 hindsight would the higher payment that normally comes with a purchase make more sense given the specter of leasing’s never-ending car payment? Maybe, you still appreciate a regular cadence of new vehicles. Is the eventual opportunity to drive a vehicle without any payment a bit more alluring today? Have your driving habits changed in a way that favors one option over another?  

  • Are there complications to a smooth exit? If you are way over the lease-allowed mileage, have significant damage beyond “normal wear and tear” turning in the vehicle might require you to write a check. If this is the case, you may consider purchasing the vehicle or exploring how the dealer may be able to disappear those charges in the event you choose your next vehicle – you guessed it – from the lease manufacturers current lineup.

No matter what you decide, the decision should be made in the context of your overall financial situation. Don’t let wheel-time excitement cause you to careen off the road to financial security.


What will you do when your lease is up?


Read Next:

Your Vehicle Leasing Questions Answered
Should I Buy or Lease my Car?


About the Blogger: JJ Montanaro is a Certified Financial Planner® professional and part of the Military Affairs team at USAA. He’s a graduate of the U.S. Military Academy and has over 20 years of financial planning experience.




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