Can you trade in a car for a lease?

Yes, you can trade in a new, used, or financed car and put the amount from the sale toward a lease on another vehicle. Trading in a leased car for a new vehicle lease may also be possible, but if you still have several months left on your lease, opting to trade it in could end up costing you.

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How does trading in a car for a lease work?

Trading in a car for a lease on a new vehicle works similarly to other trade-ins. You'll negotiate a trade-in value based on your research and the dealer's offer. Then the dealer will set up your lease with the trade-in value subtracted from your initial deposit or future lease payments.

Before you go to the dealership to trade in your car for a lease, do some homework. Use an online calculator such as Progressive's online car trade in service to determine the current value of your vehicle. Knowing its value will be helpful when you're negotiating with the dealer about how much they will give you for your trade

Is it smart to put a down payment on a lease?

No. You can usually get a lease with no money down, and any money you put down won't be returned to you. Putting a substantial down payment on a lease lowers the monthly payment, but it doesn't build equity. When the lease period expires, you turn in the vehicle, and while your monthly payments may have been lower, your down payment is gone. At Car Pro, they recommend a small down payment that covers the cost of the tax, title, and license fees, as the dealer can typically make a no down payment arrangement, especially if you have good credit.

Is a trade-in a down payment?

You can choose to use the cash from trade-in as a down payment on a lease rather than to lower your monthly payments. However, a down payment isn't always required when you lease a vehicle. It may be more beneficial to you to have the dealer apply the trade-in value towards the taxes, title, and license fees, then apply the rest to your monthly payments or write you a check for whatever is left.

What are the advantages and disadvantages of trading your car for a lease?

The advantage of trading in your car for a lease is that you'll have a lower monthly payment. The disadvantage is that when the lease is up, you will have no vehicle and no equity.

Pro tip:

Before talking to a dealer, research the depreciated value of your vehicle and the cost of the new one you want to lease. A trade-in and a new lease are negotiable transactions. Therefore, analyzing car values ahead of time can help you get a reasonable price for the trade-in and advantageous lease terms.

Can you trade in a leased car?

Trading in a leased car might be possible based on the terms of your lease, but it's not always practical. Remember, a lease is a long-term rental arrangement. You never own the leased vehicle, nor do your payments accrue equity. The purpose of a trade-in is to use the traded vehicle's cash value to defray the new one's cost. When you calculate the end-of-lease fees, the early termination fees, and the price of the vehicle, you're not likely to have any positive equity to apply to a new vehicle purchase.

What happens when you trade in a leased car?

Trading in a leased car usually involves terminating your lease early, which will incur additional fees on top of the regular lease-end fees you would pay. These fees may mean it makes more sense to simply wait until the end of your lease to get a new car.

Alternatively, you might be able to buy out the lease (essentially, purchase the car outright) and then trade it in as a vehicle you own. But buying out the lease may result in you paying a significant amount more than the car's trade-in value, so do the math before you consider buying out your lease to trade it in. There could also be restrictions on selling the leased car to a third party, especially if the vehicle's current value is significantly higher than the cost for you to buy out the lease.

  1. Inquire about any fees for terminating your lease early

  2. Ask what it would cost for you to buy out the lease and if there would be any restrictions on selling the car

  3. Get an estimate for its trade-in value

Is it a good idea to lease a car?

Leasing a car may make sense for you if you prefer to have a car for 2-3 years before getting a new car and you can get a lower lease payment than a car loan payment would be. And if you want to drive a more upscale vehicle than you can afford to buy, leasing allows you to drive one for a lower monthly payment. However, leasing won't result in the equity you might get by purchasing a car. Consider your options for buying a new or a used car so you can eventually own it outright and get more out of trading in your vehicle.

Can I trade in a financed car for a lease?

A dealer may allow you to trade in a financed car for a lease, but you'll still be responsible for the amount you owe on your current car's loan. Due to depreciation, you may owe more on your vehicle than its trade-in value. A dealer might work this difference into your new lease payments, or you may need to continue paying your current car's loan payments and your new lease payments. Use this monthly car payment calculator, and learn more about trading in a car with a loan.

Ready to trade in your car? See how you can buy, sell or trade in your car online today.

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