When you lease a car instead of buying it, you don't have to worry about common car concerns such as depreciation. But you're also not building equity in your lease. It's impossible to trade in a leased car for money in the same way you might trade in a car you own. A few options can help you trade in that old leased vehicle for a new lease or a car you own.
Review Your Lease
Consult your lease to determine what penalties you'll face for breaking the lease early. If you're hoping to trade in your leased vehicle before it expires, you'll need to consider associated costs into your car-buying budget and you might need to finance these costs if you're planning to finance a new car. If your lease is up, you won't have to pay these penalties.
Request Your Payoff Amount
Contact the company that financed the lease -- which may be an independent bank, a car dealership or a used car company -- and ask what the payoff value of the car is. You need to pay this figure before you can trade your car in. Ask if the leasing company is willing to allow a dealership to purchase the car.
Get Your Vehicle Ready
Ensure that the car is in good condition before you trade it in. This includes cleaning the interior and exterior, getting the oil changed and putting adequate air in the tires.
Determine the Vehicle's Value
Calculate the current market value of your car by consulting a website such as Kelly Blue Book. Deduct the cost of the payoff from the market value. This is your car's trade-in value. If the trade-in value is negative, it is unlikely you can trade in your lease, but if you have positive trade-in value, you might be able to get a dealership to purchase the car.
Decide Whether to Buy or Lease
Shop for a car at a dealership. If you're hoping to lease another car, leasing through the same dealer that leased you your last car might offer advantages, such as discounts or incentives to lease again. If you want to purchase a car, ask if the dealership is willing to purchase the leased car and pay off the remaining lease value. Some dealers will purchase cars to resell, particularly if it means they sell another car and are able to get some value out of purchasing the leased car.
Know the New Terms
Read all paperwork and contracts before signing the agreements. The original leasing company, as well as the new dealership, will need to agree to the deal. Otherwise, you will not be able to trade in your leased car.
- Ensure that the car is in good condition before you trade it in. This includes cleaning the interior and exterior, getting the oil changed and putting adequate air in the tires.
Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.