When you trade in a vehicle while leasing a new one, the equity (or deficit) from your trade-in can significantly affect the financial terms of your new lease. This calculator helps you understand how your trade-in's value, relative to your current lease's payoff amount, impacts your capitalized cost reduction and potentially your monthly payments.
How it Works:
The core of this calculation is determining the net equity from your trade-in. This is calculated as:
Estimated Trade-In Value – Current Lease Payoff Amount = Net Trade-In Equity
This net equity is then applied to your new lease. Here's how the outcome is interpreted:
Positive Net Equity (Surplus): If your trade-in value exceeds your lease payoff, you have positive equity. This surplus is typically applied as an additional down payment (capitalized cost reduction) on your new lease. This directly lowers the capitalized cost of the new vehicle, which in turn can reduce your monthly payments and the total amount you finance over the lease term.
Negative Net Equity (Deficit): If your lease payoff is higher than your trade-in value, you have a deficit. This amount usually needs to be paid out-of-pocket or, in some cases, can be rolled into the new lease agreement. Rolling a deficit into a lease increases the capitalized cost, leading to higher monthly payments and a greater overall cost for the lease.
Zero Net Equity: Your trade-in value exactly covers your lease payoff. No additional funds are needed, and no surplus reduces your capitalized cost.
The calculator also considers any initial down payment or capitalized cost reduction you plan to make on the new lease. This amount is added to the net equity from your trade-in to determine the total capitalized cost reduction. The formula is:
(Estimated Trade-In Value – Current Lease Payoff Amount) + Lease Down Payment/Capitalized Cost Reduction = Total Capitalized Cost Reduction
A larger Total Capitalized Cost Reduction generally leads to more favorable lease terms.
Use Cases:
Lease Upgrades: Determine if trading in your current leased vehicle will provide a financial benefit towards a new lease.
Financial Planning: Estimate the total cost reduction or potential out-of-pocket expenses associated with your trade-in.
Negotiation Tool: Understand the value of your trade-in in the context of your lease to negotiate better terms.
Disclaimer: This calculator provides an estimate based on the numbers you input. Actual dealership offers and lease terms may vary. It's always recommended to get a firm offer from the dealership and compare all lease terms before making a decision.
function calculateTradeIn() {
var leasePayoff = parseFloat(document.getElementById("leasePayoff").value);
var tradeInValue = parseFloat(document.getElementById("tradeInValue").value);
var leaseDownPayment = parseFloat(document.getElementById("leaseDownPayment").value);
var resultElement = document.getElementById("result");
var resultText = "";
// Input validation
if (isNaN(leasePayoff) || isNaN(tradeInValue) || isNaN(leaseDownPayment)) {
resultText = "Please enter valid numbers for all fields.";
resultElement.innerHTML = resultText;
return;
}
if (leasePayoff < 0 || tradeInValue < 0 || leaseDownPayment 0) {
resultText = "Your trade-in provides a surplus of $" + netEquity.toFixed(2) + ". Your total capitalized cost reduction is $" + totalCapCostReduction.toFixed(2) + ".";
} else if (netEquity < 0) {
resultText = "Your trade-in has a deficit of $" + Math.abs(netEquity).toFixed(2) + ". Your total capitalized cost reduction is $" + totalCapCostReduction.toFixed(2) + " (this includes the deficit).";
} else {
resultText = "Your trade-in exactly covers your lease payoff. Your total capitalized cost reduction is $" + totalCapCostReduction.toFixed(2) + ".";
}
resultElement.innerHTML = resultText;
}