Can you trade in a car for a lease?

How does trading in a car for a lease work?

Trading in a car for a lease on a new vehicle works similarly to other trade-ins. You'll negotiate a trade-in value based on your research and the dealer's offer. Then the dealer will set up your lease with the trade-in value subtracted from your initial deposit or future lease payments.

Before you go to the dealership to trade in your car for a lease, do some homework. Use an online calculator such as Progressive's online car trade in service to determine the current value of your vehicle. Knowing its value will be helpful when you're negotiating with the dealer about how much they will give you for your trade

Is it smart to put a down payment on a lease?

No. You can usually get a lease with no money down, and any money you put down won't be returned to you. Putting a substantial down payment on a lease lowers the monthly payment, but it doesn't build equity. When the lease period expires, you turn in the vehicle, and while your monthly payments may have been lower, your down payment is gone. At Car Pro, they recommend a small down payment that covers the cost of the tax, title, and license fees, as the dealer can typically make a no down payment arrangement, especially if you have good credit.

Is a trade-in a down payment?

You can choose to use the cash from trade-in as a down payment on a lease rather than to lower your monthly payments. However, a down payment isn't always required when you lease a vehicle. It may be more beneficial to you to have the dealer apply the trade-in value towards the taxes, title, and license fees, then apply the rest to your monthly payments or write you a check for whatever is left.

What are the advantages and disadvantages of trading your car for a lease?

The advantage of trading in your car for a lease is that you'll have a lower monthly payment. The disadvantage is that when the lease is up, you will have no vehicle and no equity.

Can you trade in a leased car?

Trading in a leased car might be possible based on the terms of your lease, but it's not always practical. Remember, a lease is a long-term rental arrangement. You never own the leased vehicle, nor do your payments accrue equity. The purpose of a trade-in is to use the traded vehicle's cash value to defray the new one's cost. When you calculate the end-of-lease fees, the early termination fees, and the price of the vehicle, you're not likely to have any positive equity to apply to a new vehicle purchase.

What happens when you trade in a leased car?

Trading in a leased car usually involves terminating your lease early, which will incur additional fees on top of the regular lease-end fees you would pay. These fees may mean it makes more sense to simply wait until the end of your lease to get a new car.

Alternatively, you might be able to buy out the lease (essentially, purchase the car outright) and then trade it in as a vehicle you own. But buying out the lease may result in you paying a significant amount more than the car's trade-in value, so do the math before you consider buying out your lease to trade it in. There could also be restrictions on selling the leased car to a third party, especially if the vehicle's current value is significantly higher than the cost for you to buy out the lease.