Can You Trade-In Your Car for a Lease?

Can used vehicles be traded in for leased ones? The simple answer is yes, but there’s a lot to consider before pulling the trigger on such a deal. Here we’ll cover what you should consider before trading a used vehicle in for a leased one.

How Does Trading Used for Leased Work?

In short, in mostly the same way that trading in a used vehicle for a new one does. The used vehicle value is calculated by the dealership based on a detailed inspection by service personnel. That value is then applied against the cost of the leased vehicle. This cost includes the down payment and lease payments. For instance, if a used vehicle is worth $10,000 and the leased vehicle costs $3,000 down and $500 a month, the lessee can cover the down payment and 14 monthly payments.

Can a Used Vehicle That Isn’t Paid off Be Traded in for a Leased One?

Yes, but the used vehicle’s value won’t cut as much out of the leased one as it would if it were entirely paid for. Depending on the circumstances, waiting until your used vehicle is paid off may be wiser before attempting to trade it in for a leased one. If you owe more than what your used vehicle is worth, it can’t be used as a trade-in against the cost of a leased one. This is because any dealership accepting that exchange would lose money on their investment immediately.

Advantages of Used-To-Leased Trade-In Deals

There are a few major advantages to making a used-to-leased trade-in deal. We’ll go into detail on them below. Keep in mind that they may or may not apply depending on your circumstances.

It Can Improve Your Credit Score

You should ask our finance professionals whether or not you can reduce your outstanding vehicle debt by swapping your used car for a leased one. The less debt you have, the better off your credit score will be over time. This option is almost always better than going for a new vehicle in terms of credit score impact because it places far less strain on your income-to-debt ratio.

It May Mean Paying Less in Taxes

Selling a vehicle for cash tends to incur a capital gains tax. A used-to-leased trade-in deal may not require the same taxes. It’s definitely worth checking with our Performance Mitsubishi finance specialists or your personal tax professional to find out whether or not this is the case in the Delray Beach area.

A Lower-End Used Vehicle Can Be Traded for a Higher-End Lease

If you’ve always wanted to try a luxury-class vehicle but didn’t think you could afford one outright, you may be able to get your hands on one by trading in your used car for a leased one. However, you need to be careful to keep to the usage-related lease terms when making this kind of deal. You may want to use a leased luxury vehicle more often, but putting too many miles on it can lead to expensive fees.

Disadvantages of Used-To-Leased Trade-In Deals

There are also a few drawbacks to consider related to trading in your used vehicle for a leased one. Let’s take a look at them now.

Lack of Equity at Lease End

If you own your vehicle outright, you’ve got equity that can be used toward a trade-in or lease. However, a lessee doesn’t hold the equity tied to a leased vehicle unless they choose to buy it at the end of the lease. Until then, the dealership is the entity that legally holds the leased vehicle’s equity.

Leased Vehicles Often Can’t Be Traded In

Under most circumstances, it isn’t possible to trade in a leased vehicle. Some dealerships allow for swapping one leased vehicle for another, but this isn’t a trade-in because ownership of the vehicles’ equity doesn’t change hands. This isn’t to say that a formerly leased vehicle can’t be traded in if it’s bought at the end of the lease because that does transfer its equity from one owner to another.

How Is The Value of That Kind of Trade-In Calculated?

Basically, trading in a leased vehicle that you purchased at the end of the lease is the same as trading in a used one. Used vehicle value is calculated after trained service professionals have completed a comprehensive checkup on the vehicle. They’ll gather the following information in preparation for the deal:

• Mechanical status: Our service professionals will check every mechanical component of the vehicle to make sure that they’re operating properly and not leaking or otherwise faulty. Damaged or worn parts will reduce your trade-in’s value because they must be replaced before resale is possible.
• Body and cabin status: They’ll also check the body and cabin condition of your trade-in. Dings, dents, and other exterior damage will count against the calculated value, as well as faded or otherwise damaged paint jobs. The condition of the infotainment, sound system, and upholstery will also be checked.
• Vehicle demand: Demand plays a part in the valuation of any used vehicle. A vehicle in less-than-ideal condition but high demand may be worth more than one in pristine condition but very low demand.
• Age and mileage: The general age and actual engine mileage play major roles in the valuation of trade-ins. Depending on demand, high-age, low-mileage vehicles may be worth quite a bit, while low-age, high-mileage ones may be worth less.
• Accessories and packages: Your vehicle will be checked for any accessories or packages that have been added to it, and that value will be included in the deal. Some customizations may decrease used vehicle value, such as particularly large wheels or performance parts meant for tracks rather than the open road.

Find out more about trading in your used vehicle for a leased one here at Performance Mitsubishi in Delray Beach, FL. Our excellent service and finance professionals will help you value your trade-in, and our inventory specialists will gladly show you what you can lease in exchange.

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