Yes, you can trade in a leased car, but the process is more complex than trading in a car you own outright. The core issue is that you don't own the vehicle; the leasing company does. To proceed, you must determine your car's payoff amount (the price to buy the lease out) from the leasing company and compare it to the trade-in value offered by the dealer. If the trade-in value is higher than the payoff amount, you have positive equity and can apply that difference toward your new car. However, it's very common to have negative equity, meaning you owe more than the car is worth, requiring you to pay the difference out-of-pocket.
The first step is to contact your leasing company for the official buyout quote. This amount includes the remaining lease payments plus a predetermined purchase option fee, which is often stated in your original contract. Next, get a firm trade-in offer from a dealership, ideally based on an in-person appraisal. Online estimators provide a rough idea, but a physical inspection is crucial for an accurate value.
You generally have three options when your lease is nearing its end:
| Option | Description | Typical Scenario |
|---|
| Trade-In at a Dealership | The dealership pays the leasing company the buyout amount and applies any equity to your new purchase. | Most straightforward if you're buying another car from the same brand's dealership. |
| Third-Party Buyout | Selling the leased car to a different dealer (e.g., CarMax, Carvana) or a private party. | Often prohibited or comes with significant restrictions and fees from the leasing company. |
| Return the Vehicle | Simply dropping off the car at the dealership and walking away, paying any disposition fees. | The standard procedure if you have no equity and don't want another vehicle. |
Many leasing companies, including major ones like Ally Auto and Honda Financial Services, have recently restricted third-party buyouts. This means you may only be able to trade the vehicle in at a franchised dealership for the same brand. Always check your specific lease agreement and contact your lender directly for their current policies, as these can change and significantly impact your best course of action.
