How trading in a leased car works
- Get your dealer payoff amount from your leasing company in writing. It can differ from the amount you'd pay yourself.
- Get offers for the car from two or three dealers or online buyers.
- Compare offer and payoff. The dealer pays the leasing company directly and closes the lease.
- Settle the difference. Positive equity can go toward your next car or back to you; negative equity has to be paid or added to a new loan.
- Confirm the lease is closed with your leasing company, and keep the paperwork.
Equity and negative equity, with an example
| Car worth more | Car worth less | |
|---|---|---|
| Dealer offer | $27,000 | $24,000 |
| Dealer payoff | $25,500 | $25,500 |
| Difference | $1,500 equity | $1,500 to cover |
Example figures only, before any taxes or fees.
Rolling negative equity into a new loan or lease makes it bigger and more expensive over time. If you'd be covering a large gap, compare a lease transfer or simply waiting.
Rules that can block or change a trade-in
- Dealer payoff restrictions. Some leasing companies only accept payoffs from their own brand's dealers, only from you, or quote dealers a higher payoff. That can make an outside offer less valuable than it looks.
- Different payoff amounts. The dealer payoff and your own payoff can differ. Always compare offers with the dealer figure.
- Payoff dates. Payoff quotes expire. Make sure the deal closes before the "good through" date, or get a new quote.
Questions to ask before you shop the car
- Do you accept payoffs from any dealer, or only from your brand's dealers?
- What's the dealer payoff amount, and what's my own payoff amount?
- How long is the payoff quote good for?
- If I buy the car myself first, would sales tax apply in my state?