There are a variety of ways to trade in a vehicle and get a different one, regardless of whether you own the vehicle outright, carry a loan or hold a lease. There are different financial ramifications for each option. When you trade in a leased car, consult your lease agreement for clauses governing trade-ins. If you are still owe money on the lease agreement, you will typically have to pay the balance in full or roll the overage into a new loan or lease.
Read Your Lease Agreement
Your lease agreement will outline the terms of your contract with the auto leasing company. Many car companies are happy to have you turn in a leased vehicle before the contract expires, because it gives them the opportunity to move you into a new lease and potentially a higher-priced vehicle.
Decide Who to Trade With
If you want to trade in a leased vehicle with a company other than the one you are currently financing through, they may agree to buy out the portion of your remaining contract or include the outstanding balance in a new contract. For example, if you owe $5,000 on a lease contract and want to trade the vehicle in for a $25,000 vehicle, a dealership may be willing to give you a loan for $30,000. This includes the cost of the new car as well as the excess owned on your lease contract.
Find the Current Value of Your Vehicle
You’ll want to have a firm understanding of the existing fair market value of your leased vehicle before you trade it in. If the value of your vehicle is significantly less than what you owe on it, trading it in and refinancing the balance may cost you more in the long run. This doesn’t mean it can’t be done, but that you are likely to pay more over time. Kelley Blue Book is a commonly used guide for calculating the worth of a vehicle based on make, model, miles and condition.
Benefits of Lease Trade-ins
While there are potential financial drawbacks to trading in a leased vehicle with money still owed on the contract, there can be some positive benefits as well. For example, if you trade in your lease for a vehicle that is more fuel-efficient, requires less maintenance or has a better interest rate and terms, you could come out ahead in the long run.
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