how to trade in a leased car

Thinking about getting into a new vehicle before your lease is up? You’re not alone. Many people find that their needs change, or a fantastic new model catches their eye, long before their lease term concludes. The good news is that trading in a leased car is a common and often straightforward process. It can feel a bit different from trading a car you own, but with the right information, you can navigate it smoothly.

This guide will walk you through the essential steps for how to trade in a leased car. The key is understanding your lease’s equity situation and working with your dealer to find the best path forward for your next vehicle.

Your First Step: Determine Your Car’s Equity

Before anything else, you need to know your vehicle’s payoff amount and its current market value. Contact your leasing company to get the official buyout price. Then, use online valuation tools to see what your car is worth in the current market. If your car’s market value is higher than the payoff amount, you have positive equity. This equity can be used as a down payment on your next car. If the payoff is higher, you have negative equity, which you’ll need to address in the deal.

How to Trade in a Leased Car at a Dealership

The most common approach is to handle the entire transaction at a dealership. Whether you’re returning to the same brand or switching, most dealers are equipped to manage a lease trade-in. They will appraise your leased vehicle, contact the leasing company to pay off the balance, and then apply any positive equity toward your new purchase or lease. It’s a one-stop-shop that simplifies the process, as the dealer handles all the paperwork and communication with the leasing company.

What to Do About Negative Equity

Finding yourself “upside-down” in your lease is a common situation. If you owe more than the car is worth, that negative equity doesn’t just disappear. In most cases, the dealer will roll that remaining amount into your new car loan or lease. While this gets you out of the old lease, it does mean you’ll be financing more for your next vehicle, which increases your monthly payments. It’s crucial to weigh this financial impact before proceeding.

Preparing for a Smooth Trade-In

A little preparation goes a long way. Gather all your lease documents, as the dealer will need specific account information. Giving your car a thorough cleaning, both inside and out, can also help during the appraisal. A well-maintained vehicle often appraises for a higher value, which can help minimize any negative equity or boost your positive equity.

Trading in a leased car is a viable option for many drivers. By starting with a clear picture of your vehicle’s financial standing and working with a knowledgeable dealer, you can transition out of your current lease and into a car that better fits your life today.