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View Full Version : How does trade in work on a lease?


dvsone
11-11-2006, 04:32 PM
does the trade in amount reduce residual value?
or reduce cap cost?

is there advantage or disadvantage to trading in when leasing vs. buying?

acf69
11-11-2006, 05:11 PM
it reduces cap cost

don't lease if you don't intend keeping the car and have a trade-in. In case you total the car, your insurance only covers the (low) montly lease payments left.

I have a 04 VW Golf that I will sell privately once I get my new leased 335i for that exact reason

Locksmythe
11-11-2006, 06:33 PM
Wow, good to know.

riverripper
11-12-2006, 02:59 PM
They can cut you a check for the difference between what you owe (if anything) and what they will give you. Also check out selling to carmax. Its a lot less of a hassle than selling privately (wont get as much) and usually get more than you will for a trade.

StevOL
11-12-2006, 04:48 PM
When you trade your car in that is paid off or own free and clear, it acts as your down payment thus reducing your cap cost on a lease or amount financed if you purchase.

schley
11-12-2006, 04:54 PM
When you trade your car in that is paid off or own free and clear, it acts as your down payment thus reducing your cap cost on a lease or amount financed if you purchase.

This is one option but I wouldn't select this at all. NO CAP COST REDUCTION. Get a check for the car, or carmax it if you are in a hurry. I would strongly lean toward carmax as opposed to a trade. I don't know why anyone trades in anymore :dunno:

StevOL
11-13-2006, 12:32 AM
I strongly agree! Why trade it in if you can sell it on your own and get more for your car. That's what I do.

dvsone
11-15-2006, 03:05 AM
Carmax isn't available in the Seattle area.

are there similar services available in the Seattle, WA area?

Thanks!

SteveinBelAir
11-15-2006, 03:56 AM
Look at it this way. You have (I assume) paid off your trade in. If you use it to get your leased BMW, realize that in 3 years, you will have neither the BMW nor the trade-in.

Sell it on Craiglist.

simplemind
11-15-2006, 02:00 PM
I'm going thru the same (trade-in) process on a CPO. There is soooo much gobbaldygoop in leasing, that I think I'm just going with a purchase. :eeps:
My dilema is resale value in three years, whereas with a lease you know what the residual is, and you can walk away.
I want to get a wagon so who knows :confused: what I'll get for it at next trade-in time.

simplemind
11-15-2006, 02:10 PM
!

Paul0521
11-26-2006, 03:46 PM
Wouldn't another optin be to trade your existing car into the dealer (assuming that they gave you a good price for it), and then use the proceeds to pay extra MSDs to reduce the MF (rather then doing cap cost reduction)?

Paul

AgentBif
11-26-2006, 04:17 PM
I was under the impression that trade-ins are subtracted from the cap cost, thereby saving you that much tax and interest in addition to the flat reduction?

schley
11-26-2006, 05:00 PM
I was under the impression that trade-ins are subtracted from the cap cost, thereby saving you that much tax and interest in addition to the flat reduction?

In some states that is the case, and a reason some will put it toward the cap cost.

adrian's bmw
11-26-2006, 06:32 PM
I was under the impression that trade-ins are subtracted from the cap cost, thereby saving you that much tax and interest in addition to the flat reduction?


This is true in the sense that if there's trade equity that goes towards cap reduction, in GA, for example, that trade equity cap reduction does not get taxed like cash cap reduction. Naturally, whether it's cash cap reduction or trade equity cap reduction, if you finance less cap cost, you're going to pay less interest.

I'd say that in many high equity trade-in lease transactions, most clients just pull the equity out as cash back and just put what's necessary at signing.