How to Read Your Lease-End Letter, Line by Line
The notice your leasing company mails before your term ends is dense. Here is what each section means and which lines deserve a phone call.
Somewhere between 60 and 120 days before your lease ends, a letter or email shows up from the company that owns your car. It is usually titled something like "Lease Maturity Notice" or "Your Lease Is Ending." Most people skim it, see a date and a phone number, and set it aside. That is a mistake, because the letter is the closest thing you will get to a map of your options.
Here is how to read one, section by section. Wording differs between leasing companies, but the same building blocks appear almost everywhere.
The contract end date and the turn-in window
The end date is the last day of your scheduled term. Many lessors also describe a window, often a few weeks around that date, during which you can return the car without penalty. Returning early or late can change what you owe. If the letter gives a window, put both ends on your calendar rather than just the end date.
The residual value
This is the price the leasing company set, at the start of your lease, for what the car would be worth at the end. It matters because it is the core of any purchase price. It is not the same as your payoff, and it is not a statement about what the car is worth today. If you have not read it yet, our post on residual value versus market value covers why the two numbers drift apart.
The purchase option price
Some letters print a single figure for buying the car. Treat it as a starting point. It may exclude the purchase option fee, sales tax, registration, or title charges, and it can be tied to a specific "good through" date. Ask whether the number is the full amount a financing company would need to send, or just the contract residual.
Mileage summary
You will often see your allowed miles, the odometer reading the lessor expects, and any projected overage charge. Projected overage is calculated at the per-mile rate in your contract. If you plan to buy the car, excess mileage generally does not become a bill at all, because the car is no longer being returned. That is the single biggest reason people with high mileage look at buying instead of turning in.
Disposition and inspection language
Look for a disposition fee, an inspection offer, and a description of what counts as excess wear. The disposition fee is a charge for processing a returned vehicle. The inspection offer is usually free and gives you a written list of what the lessor would charge for. We cover the fee in more detail in its own post.
Return locations and instructions
If you do return, the letter tells you where. The address may be a specific dealership brand location, not any dealer you choose. Note it now so you are not driving across a state on the last day.
Contact information for buyout questions
Look for a separate phone number or email for purchase options. The general customer service line often cannot quote a payoff. When you call, have your account number, the VIN, and the current odometer reading ready.
The fine print about third parties
Pay attention to any sentence about who is allowed to buy the vehicle. Some leasing companies sell only to the lessee, some work with outside financing companies, and some have rules that change depending on state law. Do not assume. Ask, and get the answer in writing if you can.
Three lines worth circling
- The date any quote expires.
- Every fee that is not included in the purchase price.
- The name and direct number of whoever handles buyouts.
What to do this week
Read the letter once for the dates, then read it again with a pen. Write your questions in the margin. Then use our payoff call script to turn those questions into one efficient phone call.
Champion Auto Finance
Thinking about buying out your lease? Learn more and get started at championautofinance.com, or ask Joe a question.
More from the blog
- Add-Ons Offered With a Lease Buyout Loan: GAP, Service Contracts and Saying No
- Wear-and-Tear Charges vs. Buying Your Lease: What the Inspection Decides
- The Odometer Statement You Sign When You Buy Your Leased Car
Champion Auto Finance is a NJ DOBI-licensed financing partner, not a lender, coordinating lease buyout financing for drivers nationwide. Approvals and terms are subject to lender underwriting. Nothing on this site or in these episodes is legal, tax or financial advice.