There is common thinking that trading a leased car is not possible because "you don't own the car."
But in fact, leased cars can be traded just like cars that are financed with a loan.
That said, trading a leased vehicle often doesn't make financial sense because the lease has no "equity."
When a lease is initiated, the estimated lease-end residual value is set such that the vehicle is never worth more than the amount owed on the lease. And if the residual value was set accurately (by sheer chance), it is exactly the same as the vehicle's market value at lease-end. And during the middle of the lease, there is "negative equity" because of the way the lease payments are structured.
But things don't always work out the way the lease company predicted or expected.
Sometimes, values of used cars can increase in unexpected ways, such as during and after the recent pandemic. When this happens, values of leased vehicles (as used cars) can exceed the amount owed on the lease. Form the leasing consumer's point of view this is "equity" or value that can be used in a trade.
The trade of a leased value with "equity" is essentially the same as trading a financed vehicle with an outstanding loan. The dealer pays off the lease (or loan) and gives the customer trade credit for the remaining part of the trade credit. During the pandemic, it was not unusual for cars that had been leased a couple of year before, to have $10,000 or more of trade equity.
Of course, as time goes on, the situation will return to more normal when fewer leased vehicles will have equity during their lease, or afterwards. But there will always be exceptions. So if you are currently leasing and think you might want to trade, keep a watch on your lease balance and the trade value of your car.
