The term, lease purchase option, in car leasing refers to the option in all lease contracts for the lessee (person doing the leasing) to purchase the vehicle at the end of the lease, instead of returning it. The purchase price is always specified in the lease contract at the time the contract is signed at the beginning of the lease. Such a purchase is made from a lease finance company, not a car dealer.

A lease purchase price is also called “lease residual value” although purchase price might be a bit higher than residual value if a purchase option fee is being charged. This fee is usually about $350, for those lease finance companies that charge it.

Since a car lease pays for expected depreciation in a car’s value over the life of a lease, lease purchase price is the remaining part of a vehicle’s original price. For example if a car is priced at $30,000 and it’s lease-end residual value is $14,000, a lease would pay the $16,000 difference. At the end of the lease, a customer could simply return the car, or buy it for the remaining $14,0000 value — the lease purchase option price.

Lease purchase option price can sometimes be negotiated, depending on the policies of each lease finance company. See End of Lease Options for more details.