How to Apply the Sale of a Trade in Car for a Leased Vehicle
Using a currently-owned car for a trade-in is a way that buyers can offset the price of a new car and sell their old car that they no longer want or need. What about car buyers who prefer leasing a car versus buying a car? Can a trade-in be applied for a lease on a new car?
Yes! Here’s how to apply the sale of a trade-in car for lease options and how to trade-in a leased vehicle, too.
Lease vs. Buying: The Major Differences
Leasing a car works differently than buying a car. There are pros and cons of each option. Leasing a car allows the ‘owner’ (or borrower) to defer maintenance and other issues to the leasing company (or dealership). While car owners, those who finance or buy a car outright, are responsible for oil changes, tire rotations, and all the other upkeep of their purchase, those who lease are not.
Leasing, for this reason, could be a better option for those who don’t want to deal with common maintenance issues. The flip side of leasing is that there are limitations on mileage. Those who lease cars need to be mindful of these limitations, otherwise there could be additional financial responsibility.
The common duration or leasing a vehicle is two to four years. After the lease is termed, the driver returns the vehicle to the leasing company.
Paying for a Lease vs. Buying
In terms of financing, both leasing and buying a car (via financing) include monthly payment obligations. However, while buyers will own their car after the last payment is sent to the bank or lending institution, the last lease payment will simply signal the end of the lease.
One of the major drawbacks of leasing a car is that it could be more expensive over time. Leasing does allow more affordable payments for new vehicles, however. For individuals who want the newest model but who perhaps cannot afford to buy that model, leasing could be a favorable option.
Unfortunately, those who lease tend to cover the cost of the car’s decreasing value (i.e. depreciation). In addition, breaking a lease could be costly and/or difficult. While a car buyer can take their car out of state if they have to move for a job (that car is their vehicle!), an individual who is leasing might not have this option.
In addition, a down payment might be required for a leased vehicle. The up-front payment to begin a lease could vary.
Trade-In Car for Lease
Those interested in leasing a vehicle might be prepared for a down payment. Real Car Tips notes that a down payment isn’t always necessary for a lease, and, in fact, a down payment could be a bad idea. The site recommends including a potential down payment into the lease payments.
However, those who do put money down on a lease also could use a trade-in to cover the payment. While trade-ins are commonly used when buying a car to offset the price of a loan for a new car, trade-ins also can be used for a lease.
A trade-in can decrease the price of lease payments, as it would when buying a car. Those interested in leasing should do their homework regarding the value of their vehicle to ensure they receive a fair offer.
While trade-ins can be used to help decrease those lease payments, some car owners might just opt to sell their car privately to get the most money possible. The sale of the vehicle could help offset the lease payments, too.
How to Trade-In a Leased Car
When considering a new lease, an old leased vehicle might be traded-in, too. However, trading in a leased vehicle isn’t the same as trading in an owned vehicle.
When a lease term is complete, the car must be returned. However, there might be an option to purchase the car after the lease is termed.
Trading in a leased vehicle also could lead to the individual entering into another lease for a newer vehicle. Those who prefer leasing might just trade-in their completed lease and look for another model to lease for a few more years.
Trading in a leased car before the lease ends, though, could lead to a financial hit. Depending on the lease agreement, there could be penalties.
However, if the leased vehicle has equity, a lease trade-in could give the driver a bit more flexibility when looking at a new lease. Buyers could use Kelley Blue Book (KBB) as a tool to help them determine equity status. KBB can help drivers better understand trade-in values.
Should Drivers Lease or Buy?
Is leasing a car or buying a car the better option? The answer depends on the needs of the driver. Leasing could be the better option for individuals who don’t want to commit to buying a car.
Leasing is a shorter commitment. Individuals who don’t want to take on the responsibility of servicing their vehicle also might prefer leasing.
Buying, on the other hand, is great for those who want ownership of their vehicle. And buying also comes with fewer restrictions. For example, those who buy their vehicle aren’t limited to where or how far they can drive each year.
Moving to another state also isn’t a huge concern for those who buy their vehicle. While moving might mean registering the car in another state and maybe even dealing with new personal property tax mandates, a loan doesn’t restrict geographic location.
A lease, however, might not allow drivers to move their car out of state. Those who are interested in leasing need to read all lease terms carefully, as terms could differ.
Breaking a lease could be costly. Individuals who enter into a lease need to understand any financial obligations associated with ending the lease early.
Mileage restrictions also could be an issue for those who lease. Drivers who love to take long road trips might discover that a lease isn’t a feasible option. Exceeding mileage stipulations could result in penalties and/or fees, and this could lead to a financial hit at the end of the lease.
However, leasing also allows access to more luxurious vehicles at a lower price than purchasing that same vehicle. For buyers that want the latest model, leasing could be more affordable and could provide them with the means to drive the vehicle of their dreams.
Finding the Perfect Vehicle for Lease
For drivers interested in pursuing a lease option, Carzing can help them understand payment obligations and help find the perfect vehicle. Carzing lets shoppers calculate the monthly cost of their potential lease using a simple online tool.
In addition, car shoppers also can search for cars for lease in their area. Refine searches by make/model, trim, mileage and more. Carzing will display all the relevant vehicle options nearby.
Not finding the perfect car? Expand the search to a wider geographic area!
Using Carzing, shoppers can review their buying options, too. Carzing can help buyers get prequalified for financing and find terms that meet their budget. Find the ideal loan terms and the perfect monthly payment. Carzing will even help buyers understand down payment expectations.
Leasing and buying both offer different options to drivers. Leasing might be the ideal choice for those who don’t want to commit to ownership, who want to avoid dealing with maintenance or who want access to a more luxurious vehicle. However, buying might be the best option for those who don’t want restrictions on use and who prefer to own their vehicle.
Whether shoppers prefer to buy or lease, Carzing can help them find and finance that dream vehicle.