Should I trade in a car I own to lower my payments on a new lease?
I currently own a crossover SUV, valued at roughly 00. I'm planning on leasing a truck in the nearish future, with the intent to finance the balance after the lease ends.
I've read that down payments in general on leases are just masking the cost of the lease. Should I sell the crossover myself, and save the 00 to put down during the financing after the lease? Does it make a difference? If I traded in my paid-off car during lease negotiations, am I throwing money away?
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You need to look at the numbers when you're ready to transact. What your crossover is worth now, what the truck will lease for then, what financing deals may or may not be available will all change.
I'm not sure why you've already decided you will lease the truck, perhaps you're planning to take advantage of some kind of business write off. I would personally never put anything down on a lease, though I have argued with people on here about that particular decision. The reality is you need to look at the numbers. Some banks will adjust the interest you pay on your lease to account for your down payment, some don't.
Consider a ,000 lease, 0 per month for 36 months. Consider you pay ,000 up front as a down payment.
Example 1: ,000 lowers the amount due on the lease to ,000 lowering your monthly payment to 2.22 from 0, the downpayment has accomplished nothing. Over the 36 months you will have still paid the same ,000.
Example 2: ,000 up front changes the amount owed and other fees generally applicable to a lease (gap insurance etc) and your payment drops to 5, your total over the lease is now ,740 (,000 down and ,740 in payments).
You need to look at the numbers. In general if you know you will be purchasing the truck at the end of the lease it's more financially advantageous to just purchase it from the start.
Trade-in values are generally below what you can get in a private sale. To directly answer your question, you should sell the crossover yourself and use the balance to purchase your new vehicle.
I would encourage you to use the k to finance directly without a lease, especially if you are planning on financing after the lease term. The lease will not save you money over the time you drive the vehicle in this case, and worse, will likely expose you to risk of having to pay additional fees if you break certain terms in the lease (mileage, wear and tear, etc)
Best option mathematically is to use the k to purchase a vehicle for cash. This provides the lowest total cost of ownership.
Even if you are afraid of purchasing a lemon, leasing a vehicle is awfully expensive insurance against that possibility. You would have to rack up some significant repairs to justify the cost of the lease vs cash over the term of operating the vehicle.
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