Beating the Tariffs: Why a Lease Buyout Might Make Sense

A lease buyout lets you purchase your car at a price negotiated at the start of your lease. As car prices rise due to new import taxes, buying out your lease at that locked-in price may be a better deal than purchasing something else at market rates.

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As the economy responds to President Trump’s 25% tariff on foreign car imports, experts expect auto interest rates as well as new and used prices for both domestic and imported vehicles to rise.

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But what does that mean if you’re leasing your car? 

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And now that tariffs are in effect, is a lease buyout a better move than before? 

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Key takeaways

• President Trump’s 25% tariff on auto imports is expected to raise prices for both new and used vehicles as well as domestics and imports.
• A May 28 court ruling blocking some of President Trump’s tariffs didn’t include automobiles; they’re still active.
• Existing lease buyout terms were locked in before tariffs increased auto prices. Since you’re insulated from price increases, your buyout price may be a deal compared to market rates.
• Not all buyouts make sense. Leasing companies may have overestimated the value of your vehicle, even after accounting for tariffs.
• RefiJet can help you finance your lease buyout so you don’t have to pay a large balloon payment when your lease is up. We offer personalized tools to help you compare rates and find the right loan for your needs.

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How will tariffs impact car prices?

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Tariffs are taxes. Every car and component made outside the U.S. just got ~25% more expensive. And that’s pretty significant; over half of U.S. vehicles are either fully, or partially, imported.

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It’ll take a while for the impact to fully move through the supply chain, but Kelley Blue Book data shows new-vehicle prices already jumped by 2.5% in April 2025.

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Here’s what’s likely to happen as the market continues to adjust:

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• New car prices will go up directly because of tariffs.
  
• Used prices will likely go up as well, since people who would’ve bought new explore the used market instead.
  
• Both imported and domestically made vehicles will get more expensive, since manufacturers will avoid price differences between similar models by spreading costs over their entire inventory.
  
• The indirect cost of car ownership will rise. Repairs that rely on foreign parts will get pricier, banks will increase auto loan interest rates to account for the bigger risk of larger loans, and insurance premiums will rise to compensate for higher car values and repair costs.
  
  

Time will tell just how much prices increase because of tariffs. But Autos Drive America, which represents international carmakers in the U.S., predicts new car prices could rise by as much as $4,000.

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More than ever, it’s worth taking a close look at all your options, including buying out your lease, to stay ahead of rising costs.

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What do tariffs mean for drivers leasing their cars?

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If you’re already leasing a car, tariffs won’t impact your existing agreement at all. Your monthly payment and buyout price were locked in when you signed the lease, new average loan interest rates won’t impact you and nothing that happens with tariffs can change those terms. 

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However, tariffs could dramatically change options for when your lease is up.

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In stable markets, buyout prices and market rates tend to be pretty close, so buyouts aren’t usually bargains. But now that new and used car prices are rising, that script flips. When your lease is up, your car’s actual market value may be higher than the residual value set in your lease. 

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In other words, you could buy your car for less than it’s worth. 

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Here’s a quick example to compare:

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• No tarriff scenario: Your lease is about to end, and your buyout was set at $14,000. Similar vehicles sell for $13,000, so this isn’t a great deal. You’d be overpaying by ~$1,000.
  
• With tariff scenario: Your lease is about to end, and your buyout was set at $14,000. But since tariffs pushed used car prices higher than the market expected when your lease began, similar vehicles are worth $17,000 now. With a buyout, you’d be getting a $3,000 discount relative to the market. 

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When a lease buyout might make sense

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Tariffs don’t change the logic of buyouts. It can be a smart move if the price is a good deal compared to what similar models are selling for, and especially if it’s a car you’ve grown attached to.

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But given tariffs and rising prices, a buyout may be a good idea for other reasons:

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• You avoid tariff-driven price increases impacting other cars.
  
• Cars lose the most value when they drive off the lot for the first time. But you already paid for that in your lease. With a buyout, you avoid paying for it again.
  
• Dealer markup is expensive, even if you go for a more affordable used car. With a buyout, you skip the middle man.
  
• When you’ve paid off the car, you own it. Equity and all. 

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Then again, lease buyouts aren’t always a good idea.

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There’s no guarantee your residual value is a better deal than market price, which is why it’s so important to review your lease buyout options before deciding. After all, leasing companies could have overestimated your car’s future value.

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The car could also have known issues, be out of warranty, or you just don’t love it. In that case, locking yourself into ownership could be more of a burden than a benefit. 

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Learn more with RefiJet

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With tariffs and growing economic uncertainty, it’s hard to know if you’re making the right move. 

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If you’re weighing a lease buyout, looking to refinance your current loan, or just trying to avoid overpaying on your car in a volatile economy, RefiJet can help. Our online tools and personalized process are designed to help you save time and money. 

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FAQs

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Still have questions? Here are some quick answers about tariffs and lease buyouts. 

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How will the new tariffs affect car prices?

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It will take time for price increases to move through the supply chain, but prices will likely go up across the board. 

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Kelley Blue Book data says new car prices went up by 2.5% in April already, and analysts predict that the new, used, domestic and import markets will get more expensive in coming months.

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Is buying out my lease cheaper than leasing a new car with tariffs in place?

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It depends on your definition of cheaper. Do you want lower monthly payments or a lower lifetime loan/lease cost? To know for sure, it’s best to look for quotes from lenders and auto leasing companies.

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However, tariffs are increasing car prices. Since your lease probably comes with a locked-in buyout price from before tariffs were announced, there’s a good chance a buyout is a better deal than a new car.

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How can I calculate if a lease buyout saves me money?

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Start by finding your lease buyout price, which your lease agreement will refer to as “residual value.” Then, check the market value of your car by benchmarking against listings with the same make, model, year and mileage. If your residual value is lower than market prices, you’re in a good position to buyout your lease. 

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Do tariffs impact used car values or just new ones?

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Tariffs directly increase the cost of new cars, which has an indirect impact on the used market. Some buyers who would have bought new choose used instead, which puts upward pressure on the secondhand market. 

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Will tariffs affect interest rates for a lease buyout?

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Tariffs don’t directly impact auto loan interest rates, but they can influence interest rates nevertheless. If tariffs spark inflation, the Federal Reserve may raise interest rates directly to combat it. 

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Additionally, since car prices are going up because of tariffs, auto loans will have to be larger in order to finance a buyout, and lenders may charge higher interest rates to compensate for the greater risk.

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