At any time during your lease, you or someone else can purchase your vehicle from your leasing bank, allowing you to trade in your car to a different dealership than the one holding the original lease. To do so, your dealer must satisfy your leasing bank with the leased vehicle's purchase price, even if you owe more than the vehicle is worth.
Value vs. Buyout
Before you decide to trade in your vehicle for another purchase, check your car's value against your lease buyout price. Leased vehicles are often purchased at a higher price than financed vehicles because no negotiations or rebates are involved. You pay for only depreciation during a lease, so if you're trying to end your lease contract early, your buyout likely exceeds your vehicle's trade-in value. Check your car's trade-in value at the Edmunds or Kelley Blue Book websites or in the NADA Guide to determine whether trading the car is worthwhile.
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Lease Termination Option
You might save more money by paying to terminate your lease rather than trading it in. Many manufacturers offer some form of lease-end option for competitor or same-make vehicles. If you owe less than a year's worth of payments on your lease contract, ask a dealership if it offers any incentives that help pay for terminating your lease and purchasing a new car. If you decide to lease through the same bank, call the bank to find out if it offers any early lease-end options. Some banks allow lessees to end a lease up to one year early when using the same bank for another purchase or lease.
If the dealer you want to purchase from can't decrease your negative equity through rebates or incentives when trading your lease, consider shopping elsewhere. Many manufacturers offer discounts for buyers trading a competitor's model. If negative equity still exists even after discounts, offer a down payment to avoid a negative equity situation, which can cause problems if you want to trade or sell your new car in the future. Unless you pay off your loan early, you'll remain in a negative equity position until the loan is satisfied.
If you're over-mileage on your lease or exceeded your wear-and-tear allowance, trading your leased vehicle might prove to be the better option. Paying to terminate your lease early, whether you or the dealer pays, does not eliminate any lease-end penalty fees. Give your leasing bank your vehicle's mileage to determine the cost of over-mileage fees. If you trade your vehicle, you won't pay any fees at all because the dealer becomes the new owner of the vehicle after purchasing it from the leasing bank.