Turning in a Leased Car for Another Lease
You don’t always know where your life will take you, which means you don’t always know if the car you just leased will be the right one for you a few months or years down the line. A lot can change before the end of the typical leasing period of 12, 24, or 36 months— and if you need to lease something else, it’s good to know your options.
Whether your family goes from needing a sedan to needing a minivan or you get that big promotion and want to treat yourself, there are a few things you need to know about trading in your current lease towards a new lease. Leasing may not always be straightforward, so CoPilot is here to help walk you through some of the details!
Trading in your car with equity
The most important thing to know before trading in your current lease for a new one is whether your car has positive equity or negative equity. You can find this by doing some quick market value research and simple math.
- Positive equity: You have positive equity when the market value of your car is more than the buyout cost set by the dealership.
- Negative equity: When the market value of your car is less than the buyout cost, you are considered to be “underwater” and have negative equity. This is common for leases.
Your next steps will depend on whether or not your equity is positive or negative.
If you have positive equity in your lease
If your car is worth more than it will cost to buy the car from the lessor, then you have positive equity! When this is the case, you have a great opportunity to trade your car in early or sell it for profit and put that excess cash towards a down payment on your next lease.
This kind of ideal situation typically only happens if you keep the car in great condition and with low mileage. It is also important to get favorable terms on your lease in the first place. This will help you avoid fees that pop up when it comes time to sell your car.
FIND YOUR LEASE’S RESIDUAL VALUE
Did you know that your leased car may be worth more than you (or your dealership) thinks it’s worth? Learn how to calculate your lease’s residual value and how you can use it to your advantage.
If you have negative equity in your lease
It’s not unlikely that you will have negative equity in your car. This can be because of several reasons:
- Demand for the car has decreased
- The dealership overvalued the residual value
- The car is in poor condition with high mileage
If you choose to trade your car in early, you will owe the lessor and have to pay them the balance of the buyout clause that the trade-in value doesn’t cover. When you have negative equity in the car, it is often better to wait it out and return the car at the end of the lease.
Always remember that even though you don’t own the car, it is still important to take care of it while you are leasing and treat it as though it is one of your own assets, because in a very real way, it is.
LEARN YOUR LEASE OPTIONS
Thinking of selling your leased car? There are actually two ways to do it! Learn more about your choices in our post Want to Sell Your Lease? Here Are Your Options.
Pull-ahead lease programs
If you are up-to-date on your monthly payments, keep the car in good condition, and keep it well-maintained, your dealership might offer you a pull-ahead on your next lease. A pull-ahead is an incentive program offered by some dealerships and manufacturers in which they offer you the chance to turn in your current lease early and skip the last few months’ payments, provided that you start a new lease with a new car from them.
This can be a great solution if you are hankering for a new car and can’t wait to get out of your current lease or you are nearing the mileage limit agreed upon at the beginning of the term.
It may sound too good to be true, but it can be a win-win for both parties. You can get out of a few months’ worth of payments and get a new car that suits your new needs, budget, or style that the old one couldn’t fulfill. And while the lessor loses out on a little bit of money, getting you into a new lease agreement is worth it for them. It guarantees them at least 12 more months of payments, and if the car you are currently leasing is in high demand, it can be good for them to have more in their used inventory.
If you are already planning on starting a new lease at the end of your current one, it is probably a good idea to take advantage of a pull-ahead program if it is offered to you.
NOT JUST FOR CAR SHOPPING
The CoPilot app isn’t just for buying a car - our new CoPilot for Owning tool will help you keep track of recalls and gives you advice on which scheduled maintenance tasks are most important.
Get a curated list of the best used cars near you
The CoPilot car shopping app is the easiest way to buy a car. Tell us what you’re looking for and we’ll search the inventories of every dealership in your area to make you a personalized list of the best car listings in your area.
Only looking for newer models? CoPilot Compare is the search engine for nearly-new cars. You’ll only see cars 5 years or newer with low mileage, making CoPilot Compare is the best way to find off-lease, early trade-in, and CPO cars.
The best part? CoPilot is built using the same technology that dealerships use to buy and sell their inventories, so we have more info on each vehicle than competitors. CoPilot doesn’t work with dealerships, so there are no sponsored posts or other shady practices - just the most info on the best cars. Check out our About Us page to see how CoPilot works.
