Leasing a car has its benefits as opposed to owning one you buy from a dealership. However, it’s not uncommon to want a trade-in with another dealership.
Can you trade in a leased car to another dealership?
You can trade a leased car to another dealership. The dealership that gives you the lease will often deliver it to a bank or lender. This means you can go ahead and get another leased car and continue making car payments.
We spoke with dealership owners and lenders to better understand this matter. They agree that you can trade in a leased car to another dealer. However, consider the lease agreement’s fine print before taking such a step.
What are the Most Important Considerations Before You Trade-in a Leased Car?
Banks or leasing companies tend to hold your lease and not the dealership. This is why it’s possible to trade-in your leased car to another dealership in the US. As a result, the dealership can purchase the vehicle from the lender.
However, before jumping into this seemingly sweet deal, it’s essential to note a few considerations. These considerations include:
The Car’s Trade-in Value
A leased vehicle is easy to trade in at another dealership. However, before you take that step, know the vehicle’s trade-in value.
The best way to note the trade-in value is by subtracting the market value and the payoff value of the car.
If you get a positive sum after subtracting the two figures, you have the green light to trade-in the car.
However, if you come upon a negative result, the dealership will likely turn down the trade-in. Always the trade-in value has to be positive for this agreement to work.
Hefty Penalties and Termination Fees
A lease can be tough to terminate without any severe consequences. This is why it might not be possible to trade-in your car at another dealership.
Lease agreements put in place measures that reduce the chances of early termination. You incur hefty penalties and termination fees if you decide to go through with the termination. This is one of the downsides of leasing a car instead of owning it.
Payoff Value of the Car
Before you trade in the car at another dealership, learn more about the payoff value. Often, this information is available to the lease financier. You can contact them to learn more about the payoff value of the car.
A new dealership will need this information before they proceed with the trade-in. You must pay the payoff value for this to happen.
Option for Lease Termination
Does the lender have an option for lease termination? This might be a better idea than opting for a trade-in. You may end up paying fewer termination fees and penalties when you terminate the lease altogether.
After terminating the lease, you can buy a new car from the other dealership. This is even better if you choose to go ahead and lease with the same lender. Some lenders permit you to let go of a lease early with fewer financial consequences.
Can You Trade-in a Lease Car Early?
Trade-ins do happen, and this is possible to do at another dealership. The good news is you can do a trade-in early and terminate the lease.
But consider the termination fees and penalties you’ll incur if you opt out of the lease agreement early.
Usually, the remaining time on a lease is important to keep in mind. The best time to opt-out of a lease is towards the end. If you are at the beginning or middle of the lease, staying longer is better to avoid paying hefty fees.
One way to lower the lease termination costs is to go for the same brand. So, if you want to trade in a Volvo, ensure the new car is the same brand.
If the leasing firm has a relationship with the manufacturer, you might catch a great break.
What Happens When You Choose to Trade-in a Leased Vehicle?
Leasing a car can be one way to get a nice set of wheels. Some folks opt to buy and own a vehicle, while others choose to lease it. A lease means you pay a stipulated monthly amount to the lender to use the car.
Leases last for a specific duration, after which you can choose to sign a new one. Some choose to buy the car instead for a stipulated amount.
However, if your lease is still progressing, you can choose to trade in the car for a new one. When you choose to trade in a leased car, you have to buy it out.
This means you get to pay more than the vehicle’s trade-in value.
The equity on your leased car becomes the down payment you need for a trade-in to work. The best way for this to work is to take the vehicle to the new dealership and negotiate a sales contract.
Should You Buy or Lease a Car?
Leasing does have its benefits.
But it’s also important to note the downsides before you lease a car. Buying a car can mean getting a loan from the bank. In such instances, you must pay a specific monthly amount to the lenders.
Leases require lower monthly payments, which many find more convenient. You also have to pay a smaller down payment to use the vehicle. Once the lease is over, you can continue with the same car or get a newer model with better advancements.
However, as wonderful as leasing a car can be, you won’t own it. Many limitations come with leasing, such as limiting how far and how long you can drive the car.
In addition, you are charged a fee if you exceed the agreed mileage or modify the car in any way.
So, consider both sides of the coin before choosing to lease a car. It is possible to trade in at another dealership, but this also comes with its ups and downs.
- It’s possible to trade in a leased car at another dealership.
- Banks or lenders hold the lease agreement, not the dealership.
- Dealerships will note the trade-in value before agreeing to the new arrangement.
- Terminating a lease early incurs hefty termination fees and penalties.