How does a trade-in work with a lease on a new car?

You can usually apply a trade-in to a new lease. Positive equity from your trade typically works like a down payment, called a capitalized cost reduction, which lowers your monthly payment. Negative equity can be added to the lease, raising your payment. Because leases are paid down only partway, putting large amounts of trade equity into a lease means you could lose it if the car is totaled or stolen early. Ask how the trade is shown on the lease worksheet.