Should You Use Your Trade-In to Buy or Lease a Vehicle?

Having a vehicle to trade in is beneficial no matter which purchasing option you choose. Trading in your current car, truck, or SUV will help reduce the money you need to finance a new or used vehicle, and it will also help lower the monthly payments of a lease agreement. If you’re wondering, “once I value my trade, which purchasing option is best,” there are a few factors you need to consider to find your answer.

Although determining your trade-in’s worth might seem like the most essential part of your decision, you also need to understand the pros and cons of leasing and buying. Knowing what to expect from each purchasing option will ensure you get the most from your trade-in by using it towards the one that is most suitable for you. To make things a little easier, we’ve put together a simple guide of everything you need to know about leasing and buying a vehicle and how to get the most value for your trade so you can spend less time researching which purchasing options you should choose, and more time on selecting the perfect model.

The Benefits of Leasing

Leasing is a great alternative to buying primarily due to its affordability. You are not buying a vehicle to own with a lease; you’re simply paying off the projected depreciation of the vehicle for the time that you use it. Therefore, a leased model saves you money each month compared to those that are financed. Rather than needing a hefty down payment to get the monthly payments down, leasing a vehicle is more attainable from the start when compared to buying a new model. Using your car, truck, or SUV for a trade-in will bring your monthly payments down even further, making them even more affordable than buying a used model, with the perks of driving a brand new model.

The affordability of a lease not only saves you money but it gives you the flexibility to broaden your selection of vehicles. You’ll find that models and trim packages that might not fit into your budget if you were to finance a new vehicle are an option if you choose to lease. This means that taking home that dream car of yours that you always felt like you could never afford is actually possible.

Choosing to lease is also beneficial if you prefer to drive models with the latest styling and most advanced safety and technology features. Most leasing agreements are 24 to 36 months long, giving you the option to get behind the wheel of a brand new car, truck, or SUV every few years if you choose. Additionally, you’ll spend less on repair costs since you’ll be driving the leased vehicle only for the first few years of its life when it’s still covered under warranty. The best part is that if you end up changing your mind and decide to keep the vehicle once the lease is up, you still have the option to buy it.

The Benefits of Buying

As affordable as leasing a vehicle can be, it’s not the best option for everyone. Maybe the monthly payments are less, and the terms are shorter than the 60 to 72 months for financing either a used or new model, but leasing has many restrictions that go along with the agreement since you have to give the vehicle back once you are done with it. When you choose to buy, you have more freedom with the vehicle in general because you are paying for keeps.

One of the cons to leasing agreements is that they come with a mileage cap. The cap varies with the leasing agency, but you will be under contract to not exceed a certain mileage by the end of the lease agreement, no matter which company the lease is with. If you exceed the limit, you will be penalized for every mile you drive over, which can add up very quickly when the fee is a few cents per mile. When you finance a vehicle, you can choose to drive as many miles as you please. The only things you have to worry about regarding mileage when you buy your car, truck, or SUV are fuel costs and your vehicle’s warranty expiring from the miles you add to the odometer.

Although choosing to buy a vehicle after leasing is an option, if you lease solely to upgrade every few years, when the term’s up, there’s a good chance you might end up paying more overall with those never-ending monthly payments and mileage penalties. You might even have to pay for minor repairs and the replacement of components like rims and tires if the damage is deemed beyond regular wear and tear. Ultimately, if you don’t mind longer terms than those of a lease with monthly payments that might cost you a little more each month, or around the same for an older model, you’ll find that the freedom you’ll have with a financed vehicle and its potential to build you equity just might appeal to you more than leasing. If you trade in your vehicle to buy another, your trade will be used to lower the monthly payments by acting as a downpayment on your purchase.

Get the Most Value for Your Trade

No matter which purchasing option you choose, the monetary value of your trade-in is still going to remain the same. Whether you bring the car in for our finance team to evaluate or you take the simple route and plug in your vehicle’s information on our website under our “Sell Your Vehicle” section, the price for your car, truck, or SUV is going to be determined by the age, make, mileage, and condition. However, for you to get the most value, you can help by making sure it’s in the best condition possible.

Although it might seem obvious to ensure there are no broken headlights or parts that no longer work right if you’re looking to get the most for your trade, you might not think about the importance of a thorough cleaning. Sure, we are going to fully inspect, recondition, and detail the vehicle before it goes out on the lot for sale, but when you put in the effort to make it show-worthy, it’s a more appealing deal versus if you brought it in covered in mud with dog fur embedded into the upholstery. You might even be able to bargain a little bit more if your trade-in looks well maintained. So before you bring your vehicle in to trade, do yourself a favor and make sure everything is in working condition and clean up the interior and exterior to get the most money to put toward your next purchase.

Which Purchasing Option Should You Choose?

Lifestyles and budgets vary from person to person. Deciding whether to lease or finance a vehicle with your trade-in should be determined by your current monetary situation and needs. If you’re looking for the most affordable monthly payments for a new car, truck, or SUV, with a minimal down payment, if any at all, then leasing might be right for you. Maybe you prefer the freedom to put as many miles and customizations on your vehicle as you want. If that’s the case, then financing a new or used vehicle will appeal more to you. Both leasing and buying come with their pros and cons, but what’s most suitable for you should be the deciding factor, even when determining how to use your trade-in.

At the end of the day, your trade-in vehicle is going to be worth the same no matter which purchasing option you choose. You can possibly get a better price if it’s in good condition, but choosing to lease over buying a vehicle or vice versa will have no effect on that value. So, the decision of whether to lease or buy rests solely on your needs, and having a vehicle to trade-in is only going to help you lower costs. Choose the new or used vehicle and payment plan that are right for you, then apply your trade-in value and watch those monthly payment amounts drop.