To trade in a leased car, you generally follow these steps and considerations:
How to Trade in a Leased Car
- Check your lease agreement and payoff amount: Since the leasing company owns the car, you must know the lease payoff balance, which includes remaining payments and any fees for early termination
- Determine your car’s trade-in or wholesale value: Use online tools or dealer appraisals to estimate your car’s current market value. This helps you see if you have positive equity (trade-in value exceeds payoff) or if you are "upside down" (owe more than the car is worth)
- Visit a dealership: Dealers can pay off your lease balance to the leasing company and buy the car. The dealer then applies the wholesale value as trade credit toward your next vehicle, minus any termination fees they cover
- Understand potential fees and penalties: Early lease termination usually incurs significant fees, including penalties for excess mileage or wear and tear. These charges can reduce or eliminate any equity you might have
- Options if upside down: If the payoff exceeds the trade-in value, you may need to pay the difference or roll it into your next lease or purchase. Alternatively, some dealers might cover remaining payments but give no trade-in credit
- Consider timing: Trading in near the lease end is common, but if your car’s market value exceeds the payoff before the lease ends, you might trade early and avoid some payments
- Selling privately or to third parties: You can also sell the leased car privately or to dealers like CarMax, but the buyer must pay off the lease to the leasing company. Be aware some leases restrict sales to certain dealers or brands
Summary
Trading in a leased car involves the dealer paying off your lease to the leasing company, using the car’s trade-in value as credit toward your next vehicle, and handling any early termination fees. Positive equity can help reduce costs on your next car, but if you owe more than the car is worth, you may face additional charges or need to cover the difference yourself
. If you want to trade in your leased car, start by contacting your leasing company for your payoff amount, get trade-in appraisals from dealers, and discuss options with the dealer to understand fees and credits involved.
