Can I Trade My Car in During a Lease?

You can trade your leased vehicle to a dealer toward another purchase. At any time during your lease, you may purchase the car from your leasing bank. Using a dealer simplifies the process, as it pays the bank for the car's total purchase price. Consider overall savings or expenses of trading your lease to determine if the option is worthwhile.

Amount of Buyout and Trade Value

Call your bank or credit union to determine your vehicle's purchase price. The price is often similar to the amount stated as the buyout amount in your contract in addition to any payments due. You can gauge your trade-in value using Internet appraisal guides like those offered by Edmunds.com, the NADA Guides or Kelley Blue Book websites. Determine the gap between your buyout price and your trade-in value to decide if trading your vehicle is worthwhile. You may be able to decrease some of your negative equity with a down payment or dealer rebates.

Dealer Buyout

The dealership you trade with will pay your leasing bank for the total amount of your lease buyout even if you owe more than the car is worth. If you do owe excess money toward the purchase price, the additional balance transfers to your new car's purchase price. Once your trade-in and purchase paperwork are processed, the dealer will usually send a check to your leasing bank within 10 business days. Your dealer receives the vehicle's title once it has paid the leasing bank.

Negative Equity

Trading in a lease may result in a negative equity situation. Your vehicle's purchase price is determined by your bank at the beginning of your lease, which is based on the expected value of your vehicle depending on lease-end mileage and the term of your contract. For this reason, you may find yourself upside down in your lease, or owing more than the vehicle's purchase price. To avoid carrying over negative equity, you can offer a down payment or shop for a car that offers rebates or instant discounts offered from the car's manufacturer.

Other Options

If you find that your vehicle's value is not in line with your lease buyout amount, you may have other lease-end options. Consider transferring your lease to another person, known as lease assumption. You can advertise your lease transfer through classifieds, LeaseTrader.com or the SwapaLease website. Check with your leasing bank first to find out if fees apply. Once you transfer your lease, you can start a new lease or finance without having to worry about trade value or loan amount.