Anyone have any idea how it would work if I wanted to trade in a car I owned outright and then lease my next one (instead of buying?) I've been thinking about it as it would kick the can of payments down the road a bit if I had a good amount of value in the trade.

Let's say the dealer gives me 12k for the trade and the total monthly payments on the lease are 10 and change. Clearly I'd owe some taxes and fees but otherwise would they just give me the car "for free"?

 

I'd think they'd set up your lease as normal and you could just put your money in the bank and pay the payments as usual. Don't think they would give up the interest they get from the lease completely.

My husband also suggested you could sell the car yourself as trade ins are usually very low. And you could take the money and do a prepaid 24 mo lease which might save you some interest. Depends on Acura deals at the time.

All depends on your cash needs and how much you can save by prepaying the lease.

 

The trade in will be used towards the down payment, which would then bring down your monthly cost. there's a maximum amount you can put for lease/finance. for example, you cannot put $30K down for a $35K car and finance/lease just $5k.

 

Using the car's trade value as a "down payment" on a lease to get monthly lease payments of $0 or close to it is a very, very bad idea.

If you do that deal and drive off the lot and the leased vehicle gets totaled you will recover $0 of your down payment.

If you are leasing you should focus on the following:

1. What is the negotiated selling price for the car?
2. What is the term of the lease?
3. What is the residual value on the lease?
4. What is the money factor for the lease?
5. How many miles per year?

These are the factors that go into calculating your monthly payment. Do not negotiate a lease or a car purchase based on the monthly payment - unless of course you don't mind giving away money.

I just purchased a 2014 AWD. I was looking at leasing a 2015 AWD. Without any real effort on my part (negotiating wise) I was looking at $379/mo

This was based on

On a 39 month lease the numbers are as follows: MF = .0011 Residual = 63% for 10k/yr and 62% for 12k/yr Due at signing = $2730 includes first payment Monthly = $379

 

If there's a reasonable amount of value in the trade the sales tax offset could be substantial (here in NY it's almost 9% so over $1k if the trade is 12k.)

I suppose it's easy enough to just take a ride to carmax and see what they would give us.

 

You can get a fairly good idea of what you should expect from kelley blue book

kbb.com

When I traded my Audi A4 I got within 2 or 3 hundred of what kelley said it was worth as a trade in to a dealer - which is less of course then if you sell it privately.

 

I was thinking the same thing about the sales tax. I beleive (in Illinois anyway) that you have to pay full sales tax when you lease. Seems like the better deal would be to use the trade in as a down payment on a loan versus a lease. Are they still offering 0% financing?

 

Two years ago, I traded our paid-for '10 XC60 for the '13 RDX. The trade value was used as a down payment to offset the sales tax($25K trade value X 6.5%), so the savings ended up being ~ $1500. The lien holder on the trade was ME, so I got a check for the 'payoff'. Naturally, I was free to use any or none of that money to pay down the cost of the lease; but the lease was essentially a 'sign and drive' deal.

In Texas, if I had sold the trade outright and then negotiated a new lease, the sales/use tax would have been calculated on the entire vehicle cost. There is some time limit to apply for a refund on a vehicle sold on which the sales tax had already been paid; but that was more complicated than I cared for. The value of the vehicle was essentially the same at the Volvo dealer, CarMax and the Acura dealer...all would essentially buy the vehicle from me for 'cash'...all the same amount in my case.

I was prepared to put $5000 down toward the lease; but that would have simply tied up five grand and resulted in only slightly lower payments(three year lease)...I opted for 'sign and drive'...put the $25K in the bank.

 

This article describes the risks associated with a large down payment on a leased vehicle.

http://www.autonews.com/article/2013...-payment-risk?