Trading in a Leased Car A Simple Guide for Smart Drivers
If you’re leasing a car, did you know you don’t have to wait until the end of the lease to trade it in? Trading in a leased car can be a smart way to upgrade to a new vehicle or save some money. Let’s take a look at the easy steps to trading in a leased car.
Learn how to trade in a leased car easily with this step by step guide. Discover the best tips for determining your car’s payoff amount, understanding positive or negative equity, and getting the best trade-in offer. Find out how to use lease equity toward your next vehicle, compare trade-in options, and make a smart choice on your new car.
| Step | Description | Key Points |
| 1. Determine Payoff Amount | Find out the amount needed to buy out your lease from the leasing company. | Call your leasing company to get the payoff amount, which may include early termination fees. |
| 2. Check Market Value | Look up the car’s current market value on sites like Kelley Blue Book, CarMax, or Edmunds. | If market value > payoff amount, you have positive equity; if less, you have negative equity. |
| 3. Shop for Trade-In Offers | Visit multiple dealerships or online platforms like Carvana, Vroom, and Shift for offers. | Let dealers know your car is leased and provide the payoff amount for accurate trade-in offers. |
| 4. Negotiate the Trade-In | Discuss with dealerships to use positive equity as a down payment or manage negative equity. | Use equity toward your next car to reduce the down payment or roll negative equity into the new loan or lease. |
| 5. Finalize the Deal | Agree on an offer, complete the paperwork, and work with the dealership to pay off your current lease. | The dealer will handle the lease payoff and necessary paperwork, allowing for a smooth transition. |
What You Need to Know About Leasing and Equity
When you lease a car, you’re actually renting it from a leasing company for a set time, usually two or three years. But what if you want to trade it in before your lease ends?
- Find Out Your Lease Payoff Amount: This is the amount you’d need to pay to buy out your lease. Call the leasing company to get this amount, which may include a small fee if you’re ending the lease early.
- Check Your Car’s Current Market Value: You can find out what your car is worth by using online tools like Kelley Blue Book or CarMax. If your car is worth more than the payoff amount, that’s called positive equity. If it’s worth less, it’s called negative equity.
Example: If your payoff amount is $15,000 but the car is worth $17,000, you have $2,000 in positive equity. You can use that equity to reduce the cost of your next car.
Steps to Trade in Your Leased Car
Now that you know your payoff amount and your car’s market value, let’s look at the steps for trading in a leased car.
Shop Around for Trade-In Offers
Visit local dealerships or use online sites like Carvana, Vroom, and Shift. Let them know you have a leased car and tell them the payoff amount. Some may want to buy out the lease directly, making it easy for you.
Negotiate Your Trade-In
Once you get a few offers, it’s time to see who will give you the best deal. If you have positive equity, you can use it as a down payment for your next car. If you have negative equity, some dealers might let you add it to a new lease or loan, which may make your monthly payment a bit higher.
- Example: If a dealer offers $16,000 for your car and your payoff amount is $15,000, you have $1,000 in equity to put toward your next car.
Complete the Trade-In and Get Your New Car
When you agree on a trade-in offer, the dealer or car-buying service will handle the paperwork and pay off the lease with the leasing company. You can then sign for your new car!
Tips for Trading in a Leased Car
- Read Your Lease Agreement Carefully: Some lease agreements have specific rules or fees for trading in early. Check the details before making any decisions.
- Shop for the Best Offer: Getting offers from multiple dealers can help you find the best trade-in value.
- Consider a Lease Buyout and Sale: If your car is worth a lot more than the payoff amount, you might consider buying out the lease yourself, then selling it to another buyer for a good price.
Common Terms You Should Know
- Lease Payoff Amount: The amount needed to pay off the lease and own the car outright.
- Positive Equity: When your car’s value is more than the payoff amount.
- Negative Equity: When your car’s value is less than the payoff amount.
- Lease Buyout: Purchasing the car from the leasing company.
- Residual Value: The estimated value of the car at the end of the lease.
Questions People Often Ask
Can I trade in my leased car early?
Yes, you can, but check with your leasing company to see if there are fees.
What if I have negative equity?
If your car is worth less than the payoff amount, you can pay the difference or roll it into a new lease or loan.
Is a lease buyout worth it?
A lease buyout is worth it if the car’s market value is higher than the payoff amount, or if you love the car and want to keep it.
Trading in a leased car can be a great way to upgrade or save on costs. By following these simple steps, shopping around, and making smart choices, you’ll be able to trade in your leased car smoothly and get the best deal for your needs!
