Sarah T.
Often, when you buy a new car, or even a new-to-you car, the rate you get for that initial vehicle loan or lease is not as good as it could be. That’s why so many people choose to refinance their auto loans, sometimes as soon as 30 to 90 days after purchasing their vehicle. But here’s the question: is refinancing a leased vehicle possible?
In this article, we’ll walk you through what leased vehicles are, why people sometimes choose leasing over financing, the benefits of refinancing, and how to go through the process of getting out of your lease and pursuing an auto refinance loan.
Can You Refinance a Leased Vehicle?
Let’s start by answering the burning question at hand: Can you refinance a leased vehicle? The answer is no. But before you stop reading this article, let’s explain what that is and what your options are instead. Simply stated, you can’t refinance a leased vehicle because it was never financed in the first place. It was leased. This means that the leasing company owns the vehicle, not you. As such, you can’t refinance it.
That said, there are options available for you, especially if you want to try to lower your payment or set yourself on the path to owning your vehicle. It all starts with a lease buyout loan.
What is a Lease Buyout Loan?
Before we explain what a lease buyout loan is, let’s talk about some of the reasons that car buyers choose to lease a vehicle instead of finance it. And the reasons are pretty simple.
- Lower monthly payments compared to buying the same vehicle
- The chance to drive a new car every few years
- Warranty coverage for most of the lease term
- Fewer upfront costs and little or no down payment
- Avoiding the long-term maintenance that comes with older vehicles
Now, let’s talk about what a lease buyout loan actually is. A lease buyout loan lets you purchase your leased vehicle from the leasing company at the end, or sometimes during, the lease term. Instead of turning in the car and starting a new lease, you apply for a loan that covers the vehicle’s residual value (the amount the car is worth at the end of the lease).
This option can make sense if you’ve grown attached to your vehicle, kept it in great shape, or driven fewer miles than expected. It’s also a solid choice if the car’s current market value is higher than the buyout price listed in your contract.
Pros of a Lease Buyout Loan
Here are some of the advantages to consider if you’re thinking about buying out your leased vehicle.
- You get to keep a car you already know and like
- You might pay less than market value for the same vehicle
- You can refinance the new loan later to get better terms
- No need to worry about mileage penalties or wear-and-tear fees
Cons of a Lease Buyout Loan
Of course, there are also a few potential drawbacks to keep in mind before moving forward.
- You’ll need to qualify for financing based on your credit
- The buyout price may be higher than comparable used cars
- You’ll be responsible for repairs and maintenance once the warranty ends
- Sales tax and additional fees can add to the overall cost
If the numbers work in your favor and you’re ready to transition from leasing to owning, a lease buyout loan can be a practical path forward, especially if your goal is to refinance later for even better rates through a lender like Rateworks.
The Lease Buyout Process (Step-by-Step)
So, how do you do a lease buyout? Here’s some context first: in 2025, leasing made up about a quarter of new-vehicle transactions in the U.S. (24.69% in Q1), and in Q3 2021, it was roughly the same at 24.03%. That steady share shows leasing is a common path to a newer car and helps explain why many drivers later consider buying out the lease.
Why does that matter? Well, if you liked your leased car, a buyout lets you keep it and transition to car ownership without starting from scratch. This can be especially lucrative if your buyout price compares well to current market values.
Simple Steps to Get a Lease Buyout Loan
Without further ado, let’s get into the steps you’ll need to follow to pursue a lease buyout loan.
- Read your lease contract to confirm if you have an end-of-term or early buyout and note the buyout (residual) price and any fees.
- Ask the lessor for a formal payoff quote that includes taxes and itemized fees and note the quote’s expiration date.
- Check the car’s current market value to see if the payoff is favorable for you.
- Gather documents you’ll need for a loan application such as proof of income, insurance, driver’s license, and the lease payoff letter.
- Apply for a lease buyout loan with lenders that handle buyouts; compare rate, term, total cost, and any prepayment rules.
- Choose your lender and let them coordinate funding directly to the lessor; avoid making extra payments to the lessor once funding is in motion.
- Complete title and registration work; the vehicle will now be in your name (or your lender’s name as lienholder).
- Recheck your numbers a few months later; if rates improve or your credit rebounds, consider refinancing the buyout loan through a provider like Rateworks.
Rateworks Offers Auto Loan Refinancing
If refinancing a leased vehicle is the path you want to take, Rateworks can help. Our loans can be used to help you take on a new loan for your previously leased car. And all you need to do to get started is to apply and get a free quote.
Want more car-related tips? Follow the Rateworks blog to stay up to date on how to save money on car maintenance, insurance, and interest rates. We’re here to help you save money in all aspects of car ownership.
