Start by determining how much a car lease trade is going to cost you.
Depending on your particular lease company, you'll probably have fees associated with trading in your lease. You may have an early termination fee, fees for going over the mileage allowance, fees for the condition of the car or other penalties. Consult your existing lease for any language governing a lease trade, including early payoff and termination penalties. No matter what a dealer tells you, the only organization that can change or end your lease is the institution that holds it. Unscrupulous dealers use a number of lease trade scams to run up fees and penalties if you trade in your lease, all the while telling you they're getting you a deal. Consult your leaseholder directly so you know the cost for a lease trade.
Research dealer incentives.
Many car dealers offer special terms or incentives to people trading in their leases. The dealer may offer to pay your early termination fees if you want to do a lease trade. Beware this offer. Most times, when the dealer offers to pay fees associated with a lease trade, the dealer actually finds a way to hide those fees in your new lease. Before you discuss a lease trade, get the terms of your new lease in writing. Compare the terms of the lease with the terms the dealer gives you for the lease trade, and be sure there are no significant changes in interest rate, fees associated with the lease or the cost of the lease itself.
Do the math to determine whether a lease trade makes sense financially.
If you want to consider a lease trade because your car uses a lot of gas and you want to switch to a smaller model, do the math. Early termination fees and lease buyout penalties can cost hundreds or thousands of dollars. The cost is even higher if your lease trade involves rolling the fees into your new lease, which most dealers do when they buy out an existing lease. Then, not only are you paying the fees on top of your new lease, you're paying interest on the fees. Calculate how much you spend on gas per month, and multiply that out to the termination of your lease. If that number is less than a lease trade would cost, you should consider keeping the vehicle.
Follow up with your old leaseholder.
If the dealer of your new car handles the lease trade, get everything in writing about paying off the old lease. Then, follow up with your old leaseholder to make sure the lease was properly paid and terminated. The last thing you need is calls from a collection agency because the dealer neglected to terminate your lease and pay the fees in a timely manner. If you find any problem with the lease trade paperwork on your old vehicle, send copies of all documents to both leaseholders and follow up by phone until the situation is resolved.
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