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Hi-

Looking for some advice on a lease. I have a $7000 outstanding balance on a car I want to get rid of and lease a new car. If my KBB value is $3500, will the dealer apply the value to the lease down payment and roll the balance owed on the note into the monthly lease payment? What happens if I turn the car in early? What's the best way for me to go about this?

Much appreciate the advice!  

Hi, I used to work in automotive industry for some time. The scenario you are describing is called "Negative Equity" it basically means the value of your vehicle is falling faster than the loan taken out on the vehicle. It shouldn't be a problem when the amount is small like 500-1000, but once it hits $3500-5000 dealers are stuck, because unless you buy a vehicle that has 3500-5000 profit, they have no where to hide your negative equity. Hiding negative equity is illegal from the banks perspective. So an other solution is to go with a used car financing provider, especially the ones deals with Bad Credit Car Loans because they can easily hide the amount you are asking, and get you out of that vehicle. Now the problem will be even bigger the next time you are trying to switch a car. Generally it is not a good idea to do so, unless you really need to get into another car.