Can You Trade In A Leased Car

Whether you re an individual looking for a personal lease or a limited company looking for a new business lease this can be a great way to start paying off the cost of your new finance deals.

Can you trade in a leased car. You get a new car drive it for a few years and have the option to buy it or turn it back in and lease again. With most brokers the answer is yes. When you compare the lease to a financed purchase of the car the lease will have a higher payoff amount at any point in the lease than what a loan payoff would have been at the. However trading a lease may require a significant amount of out of pocket cash compared with waiting until the lease terminates turning in the car to the leasing company and then buying or leasing another vehicle.

With a leased car to trade the dealer actually has more options to get the potential buyer out of the lease and into a new car. People want the best deal possible whether they re financing or leasing and trading in their current vehicle to use as a down payment is a popular option. As your lease is nearing its end keep a close watch on what your vehicle is worth. Because you can t just turn in a leased vehicle in the middle of your lease term and walk away it can be complicated and costly to end your lease early even more so if you don t do it right.

Trading in at the beginning of a lease if you are in the early stages of your lease contract it is not a good move to trade for a new car. Trade in your leased vehicle. Dealers will work the deal to their advantage not yours. For example the trade in value of your car may be 7 500 but the car lease buyout the cost to buy the vehicle from the leasing company might be 10 000.

When you trade in your leased car the dealer any dealer will pay off the lease and the cost of the payoff goes against the trade in value of your leased vehicle. In most cases it is not practical to trade a leased car although dealers can make it seem like a good thing to do. Therefore if a lease agreement is for 10 000 but you have a trade in vehicle worth 2 500 you only have to pay sales tax on the 7 500 that s left over. When you trade in a vehicle you re only responsible for paying sales tax on the final lease price.

To check if a lease trade in is the right thing for your situation you first need to know how much the car you re leasing is currently worth and what. As you might expect a car worth less than the buyout price has negative equity. If your car is worth more than the buyout price your lease has positive equity that you can use toward a trade in. Trading a leased car is a bit more complicated than trading a purchased car.

Therefore you should try avoiding such a trade unless you absolutely know you will benefit.