Can I Trade in My Leased Car for a Used Car?

By Tara Baukus MelloLifestyle and

Dear Driving for Dollars, 

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I want to turn in my leased car early because I have a new job that is requiring me to drive more miles than the mileage allowance. I'd like to replace it with a used car. How will the dealer treat the payments still left on my leased car when I go to trade it in? 

- Richard

Dear Richard,

Car leases work differently than car loans, and you generally can't simply trade in a leased car before the lease is up in the same way you can with a car with an outstanding loan balance. Car leases are a contract for you to use the car for a specific time period, and there are penalties for backing out of the lease early.

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There are two things you can do to get out of your current car lease with minimal financial impact and possibly avoid penalties altogether. First, you can go to a dealer that carries the brand of car you leased -- it does not have to be the dealer you originally leased the car from -- and you can see if the managers there will allow you to turn in the car early for another car lease. You can sometimes do that without a penalty, depending on the automaker.

If you definitely want to own a car and do not want to lease, then check your lease agreement to see if it allows for a lease transfer. If it does, then you can get someone else to take over your lease by either finding someone on your own or by using a reputable lease transfer company, such as or

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