Equity into new lease

Bbesq

I have a question about rolling equity in expiring lease into a new lease. Normally people suggest not putting a down payment on a lease because of the car is lost or stollen you will not be able to recover that cash down payment (not sure if that’s correct). If it is, then what about when you have equity in an expiring lease and the dealer offers you money to buy that expiring car out and they offer to put it towards a new lease that you are negotiating. Does that work the same way as if you just made your own cash down payment and therefore you could lose it if the new car is lost or stolen? If that’s how that works any other suggestions on how to best work things with equity in expiring lease?

Michaell

Bbesq said:

I have a question about rolling equity in expiring lease into a new lease. Normally people suggest not putting a down payment on a lease because of the car is lost or stollen you will not be able to recover that cash down payment (not sure if that’s correct). If it is, then what about when you have equity in an expiring lease and the dealer offers you money to buy that expiring car out and they offer to put it towards a new lease that you are negotiating. Does that work the same way as if you just made your own cash down payment and therefore you could lose it if the new car is lost or stolen? If that’s how that works any other suggestions on how to best work things with equity in expiring lease?

The reasons for not making large cash down payments on a lease are exactly as you state. The same is true for using equity - you could cash it out and take the equity as a check from the dealer, or you can roll it over to the new lease.

Generally, we suggest avoiding that as well, but given how poor most leasing programs are, we are finding more and more folks using their equity to "buy down" the payment on the new lease.

When you start to get quotes for a new lease, you'll see what I mean. A lease from 2020 or 2021 will look downright cheap by comparison.

Bbesq

So what’s best play then if I definitely have equity in my current car. We want to get a larger suv than the one we currently have so buying it out and keeping it for ourselves doesn’t make much sense. Any other suggestions on how to protect ourselves against a totaled or stolen car and losing the equity we rolled in?

Michaell

Bbesq said:

So what’s best play then if I definitely have equity in my current car. We want to get a larger suv than the one we currently have so buying it out and keeping it for ourselves doesn’t make much sense. Any other suggestions on how to protect ourselves against a totaled or stolen car and losing the equity we rolled in?

There isn't a good answer to that. Either accept that your new lease payment will be much higher than your current one, or risk the equity in your current lease.

Depending on the brand, you can use a one-pay option to lower the MF, or multiple security deposits, if they are allowed. In either case, you won't risk the up front money.

kyfdx

Bbesq said:

So what’s best play then if I definitely have equity in my current car. We want to get a larger suv than the one we currently have so buying it out and keeping it for ourselves doesn’t make much sense. Any other suggestions on how to protect ourselves against a totaled or stolen car and losing the equity we rolled in?

The dealer can cut you a check for any excess equity you have in the trade-in.