lease with trade-in

[minuit3101]

Aloha from Maui!

I am considering leasing a 2013 or 2014 Leaf. (Would love to hear opinions on whether one or the other is preferable, but that is not my main question).

I have spent the past few hours reading posts and have seen many deals that people wound up with, but none mentioned a trade-in. Most of the deals people are reporting talk about $0 down or up to $3000 down. I have a 2006 TDI New Beetle with 70k miles in good condition that Kelly Blue book says I should get between $7-8K for. (This car would be well sought after on Maui as there aren't many manual transmission bio-diesel cars available).

Main question: How can I expect this to affect the negotiation? Can I negotiate really low monthly payments? I'm not really concerned about having a low residual, so that could help too, right?

Ignorant question: I still owe about $2500 on the VW. What is the process for this? Does the dealership pay off the bank?

Thanks in advance for any help. This is going to be my first time leasing.

 

[LeftieBiker]

The rule is "Never tell them you have a car to trade in until you have a deal." Otherwise they can just quietly factor in your trade and end up getting it for less than it's worth, or even for free. The other rule is "If the car is any good, sell it yourself." I'm not up on what happens when you owe on your trade; I had a friend once who somehow forgot to tell a dealer she was buying another car from that she owed $4k on her old van, and they had to pay it off. That's the exception, though, I suspect.

 

[biggsy]

As Leftie says, go in with the attitude you will sell your car separately. After you reach agreement on a deal, whatever it is $0 down - $2000 down then discuss trading in the car. As far as the payoff, yes, they will handle the payoff and everything. Assuming your car is worth $6500 and you owe $2500, they will apply the equity ($4000) against the down payment/lease. You must be willing to walk out and sell the car yourself, go in with the the mindset that is what you are going to do, that is really your best financial outcome. If they are willing to pay a high enough price that the hassle of selling is not worth the difference to you then make the deal.

Lets "assume" you agree to a deal of $2000 down and payments of $200/mo for 36 months. Now trade in your car with $4000 equity, $2000 of the $4000 goes to the down payment. The other $2000 will become additional down payment and reduce your payments by slightly more than $2000/36 = $55.55. The slightly more comes because of the difference in interest, so payments may go down $56 or $57 per month, leaving you a payment of $200 - $56 = 144/mo. They will NOT give you $2000 cash back, it is possible but I have never heard of that happening. If you decide to make the deal without selling the car first and pay the down payment out of pocket, you cannot later adjust the payments by paying the additional money on the lease. You can pay the lease ahead and then send in the $145/mo and continue to keep a paid ahead status, or not make any payments until the $2000 is used up in 10 months.

One thing to keep in mind, if you pay a larger amount down or pay ahead on the lease and then are in an accident and total the car you WILL NOT receive a refund of any amount.

 

[minuit3101]

Thank you guys. Very helpful! Maybe I will just sell it myself.