Automotive

Car Lease Buy Out - Can I trade in?

  • Last Updated:
  • Jun 3rd, 2020 2:51 pm
[OP]
Deal Addict
User avatar
Nov 23, 2010
1061 posts
381 upvotes
Toronto

Car Lease Buy Out - Can I trade in?

I havent leased a car before, but just wondering for the lease buy out on a car - Can I trade in another car at that point in time?

My wife is currently driving her car and isnt willing to give it up, but by the time we are done our lease it may be time to get rid of her car. Would be convienant to be able to just trade in her car, and buy out the lease on the car with whatever car we have leased at that time.

Thanks in advance

Edit: Sorry I should have been more clear

My wife OWNS her car (2016 Corolla), free and clear - No liens, lease or anything else on it. So we can do what we want with it.

We were looking to add a second car/SUV, since we have a little one coming.

Since we dont know if we will have 1 or 2 kids, we were thinking of leasing an SUV for a few years first. Depending on what happens, we may decide to want to keep the SUV. So at the end of the lease, for the lease buy out I was wondering for whatever the cost is at that time - Can we trade in my wifes car to put towards the lease buy out at the end of the lease

So hypothetically we lease a 2020/2021 SUV for lets say 4 years. At the end of 4 years, my wifes car would then be close to 8 years old. It may make sense then to trade in her 8 year old car and keep the "newer" car that we leased
Last edited by chillychin on Jun 1st, 2020 8:37 pm, edited 2 times in total.
11 replies
Deal Addict
User avatar
Jul 26, 2007
4824 posts
2363 upvotes
Toronto
Sure, if your old car is high demand, dealer won't mind buying your car. Ask for a cheque so you get the money back while saving on the hst when buying a new car. Some dealers 2ill coherse you to not trade-in because your old car sucks but push for it, if they want a sale.
Deal Fanatic
Sep 1, 2004
5416 posts
4078 upvotes
peteryorkuca wrote: Some dealers 2ill coherse you to not trade-in because your old car sucks but push for it, if they want a sale.
I hope a sale you mean kickback of finance deal or purchasing extended warranty or maintenance package on the buy out.

Otherwise, a dealership has 0 incentive to help you out unless the car you are trading in is highly desirable and they can lowball you.
Jr. Member
Oct 25, 2014
156 posts
43 upvotes
Toronto, ON
chillychin wrote: I havent leased a car before, but just wondering for the lease buy out on a car - Can I trade in another car at that point in time?

My wife is currently driving her car and isnt willing to give it up, but by the time we are done our lease it may be time to get rid of her car. Would be convienant to be able to just trade in her car, and buy out the lease on the car with whatever car we have leased at that time.

Thanks in advance
Actually the most convenient way would be to return the car and get a new one at the end of th elease.

The trade in only make sense if the lease buyout value is much less than the market prices and the trade in price the dealer will give to you. (Generally that's not going to happen, and the value is not substantial enough to go thru the hassle of re-registering the car and trading it in)

E.g. If the lease buyout is $15K, but the dealer will only give you $14K for the trade in, you simply RETURN the leased car and get a new one.
On the other hand, your buyout might be $15K, but the market value/trade in value is $20K, in that case you can buyout the car for $15K and have a $20K value for trading in a new vehicle.
Jr. Member
Oct 25, 2014
156 posts
43 upvotes
Toronto, ON
Xtrema wrote: I hope a sale you mean kickback of finance deal or purchasing extended warranty or maintenance package on the buy out.

Otherwise, a dealership has 0 incentive to help you out unless the car you are trading in is highly desirable and they can lowball you.
dealer has incentive because a "trade-in" basically mean a new sales...
Deal Fanatic
Sep 1, 2004
5416 posts
4078 upvotes
stanleyt wrote: dealer has incentive because a "trade-in" basically mean a new sales...
Only if there is money in it. If you read between the lines, by the time OP give up wife's car, it could be 5+ years old and off warranty. Some dealers may not want the hassle to deal with it unless the car is rare and desirable. Or may not give you top trade-in dollar since they don't really make a sale on the other side.
Deal Fanatic
Apr 16, 2007
7651 posts
2868 upvotes
Financial District B…
chillychin wrote: I havent leased a car before, but just wondering for the lease buy out on a car - Can I trade in another car at that point in time?

My wife is currently driving her car and isnt willing to give it up, but by the time we are done our lease it may be time to get rid of her car. Would be convienant to be able to just trade in her car, and buy out the lease on the car with whatever car we have leased at that time.

Thanks in advance
You can if the lessor allows it. Some lessors will not allow you to use their property as capital for a trade. Moreover, allowing you to trade it means you terminated the lease agreement early and they may not like that. So best to call them.
Lastly, the new dealer can create a negative equity position from the lease trade where you will ultimately be penalized for. Why put yourself in such a bad position for a vehicle you don't even own.
Call the lessor for a payout plus the per diem.
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again
Deal Addict
User avatar
May 8, 2002
4779 posts
1310 upvotes
stanleyt wrote: Actually the most convenient way would be to return the car and get a new one at the end of th elease.

The trade in only make sense if the lease buyout value is much less than the market prices and the trade in price the dealer will give to you. (Generally that's not going to happen, and the value is not substantial enough to go thru the hassle of re-registering the car and trading it in)

E.g. If the lease buyout is $15K, but the dealer will only give you $14K for the trade in, you simply RETURN the leased car and get a new one.
On the other hand, your buyout might be $15K, but the market value/trade in value is $20K, in that case you can buyout the car for $15K and have a $20K value for trading in a new vehicle.
Also in your example, you would save the tax on 5 grand ie pay tax on your 15k buyout, but get 20k tax incentive on your trade in toward your next purchase
Deal Fanatic
Apr 16, 2007
7651 posts
2868 upvotes
Financial District B…
joshmxpx wrote: Also in your example, you would save the tax on 5 grand ie pay tax on your 15k buyout, but get 20k tax incentive on your trade in toward your next purchase
NO he would not save any 'trade-in' tax because leases are calculated where the taxes are charged per month via the lease monthly payment. The payout of the lease is plus tax if he chooses to exercise the opyion to buy it out.
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again
Deal Fanatic
Sep 1, 2004
5416 posts
4078 upvotes
chillychin wrote: So hypothetically we lease a 2020/2021 SUV for lets say 4 years. At the end of 4 years, my wifes car would then be close to 8 years old. It may make sense then to trade in her 8 year old car and keep the "newer" car that we leased
Yeah, pointless. If you are a 1 car family and can be a 1 car family, there is no point doing this.

Your best bargaining power is when you pick up a new lease on a new car. You bargaining power is weakest is at buy out at lease end.

So if you can stay 1 car family, just trade in the Corolla now when it's still worth something when you pick up the lease. There is no point to run OPEX on 2 depreciating assets when 1 can do.
Deal Addict
Jan 8, 2007
2548 posts
1079 upvotes
Calgary
mikeymike1 wrote: NO he would not save any 'trade-in' tax because leases are calculated where the taxes are charged per month via the lease monthly payment. The payout of the lease is plus tax if he chooses to exercise the opyion to buy it out.
If the lease buyout is 15k, and dealer offers him 20k for it, yes there is tax savings on the trade towards a new car.

Also I have never encountered any lease company that cared about early termination. All they care about is the buyout. You pay that in full including taxes and they dont care who pays it, be it dealer or an individual.
Deal Addict
User avatar
May 8, 2002
4779 posts
1310 upvotes
mikeymike1 wrote: NO he would not save any 'trade-in' tax because leases are calculated where the taxes are charged per month via the lease monthly payment. The payout of the lease is plus tax if he chooses to exercise the opyion to buy it out.
That's exactly what I said. He would pay tax on 15k buyout, THEN trade it in for 20k, the net savings would be the tax on the difference (5k). Ie if he bought a 30k car with the trade in of 20k, he would only pay tax on 10k. Therefore, when its all said and done, he's paid taxes on 25k in total, saving the tax on 5k.

Top