Leasing a car has long been a popular choice for drivers who value flexibility and affordability. However, many people are unaware that leasing isn’t limited to brand-new vehicles. An increasing number of drivers are turning to used car leases as a cost-effective alternative without sacrificing quality.
While the idea of leasing often conjures up images of sleek, brand-new cars, leasing a used vehicle is gaining traction as an appealing option. It can provide several advantages, including reduced costs, a wider range of vehicle choices, and lower depreciation rates. If you’re considering leasing, exploring the option of a used car lease might be a smart move. Here’s what you need to know.
So, Can You Lease a Used Car?
Yes, it is possible to lease a used car, but the process may require visiting a franchised dealership and searching for a certified pre-owned (CPO) vehicle. Several manufacturers, such as Acura, Audi, BMW, Chrysler, and others, offer CPO leasing programs.
Differences Between New and Used Car Leasing
The main difference is in cost. Used car leases typically have lower monthly payments because the vehicle has already undergone significant depreciation.
How Does Leasing a Used Car Work?
Leasing a used car works much like leasing a new one, but there are a few notable differences. Instead of leasing a brand-new vehicle, you lease one that has previously been owned or leased. These vehicles are usually certified pre-owned (CPO) cars, which have been thoroughly inspected and reconditioned to meet the manufacturer’s standards.
When you lease a used car:
Residual Value Matters: The residual value represents the estimated worth of the car at the end of the lease term. Since used cars have already undergone most of their depreciation, their residual value is often closer to the current market value. This can lead to lower monthly payments compared to leasing a new car.
Mileage Limits Apply: Similar to new car leases, used car leases come with mileage restrictions. If you exceed these limits, you may incur additional fees.
Lease Terms Are Shorter: Used car leases typically have shorter durations than new car leases, often ranging between 24 and 36 months.
It’s important to note that this approach to leasing primarily applies to used vehicles handled by franchised dealers. These dealers are the only ones who can offer genuine certified pre-owned (CPO) vehicles, ensuring quality and reliability.
NOTE: You may have heard of used car rentals from independent dealers that offer a “Buy Here, Pay Here” basis. These rentals often come with a lot of conditions, so you should look into them very carefully. Additionally, specialty dealers that sell exotic, ultra-luxury, or classic vehicles may offer in-house used car rentals.
How Can You Lease a Used Car?
One option for leasing a used car is to find a certified pre-owned (CPO) vehicle from a dealership. With a CPO car, you can rest easy knowing that it has been inspected and has no major defects.
Prices may be higher than what you might find with a non-certified used car, but you will receive a certification that the car has been inspected. Once you’ve found the CPO car you want, the leasing process is similar to that of a new car.
Another option is to take over an existing lease. You’ll usually need to get written permission from the original lender or dealer, but if they approve, you can simply continue paying the lease according to the original terms.
Buying someone else’s lease has the added benefit of avoiding any down payments or acquisition fees.
Pros and Cons of Leasing a Used Car
| Pros | Cons |
|---|---|
| ✔️Lower monthly payments than for buying ✔️ May be affordable to buy the used car at the end of the lease ✔️Insurance may be more affordable since the car is worth less | ❌With any used car, you might not get the latest technology ❌It’s a lease, so there’s a mileage limitation ❌You’ll still need good credit |
Easy Steps to Finding a Used-Car Lease
1. Find a Dealer That Offers Used-Car Leases
A dealer that provides certified pre-owned (CPO) vehicles is your best option for finding a used-car lease. Franchised dealerships often have a wider selection of cars than online marketplaces, particularly if you already have a specific model in mind. For example, a Subaru dealer is more likely to offer a broader variety of used Subarus than a general internet search.
2. Negotiate the Best Deal
A car lease has several negotiable components. So firstly, you should know that what things you can negotiate during a car lease. One key factor is the “money factor,” which functions like the interest rate on a purchase loan. Negotiating a lower money factor can reduce your monthly payments. You can also try to negotiate a better residual value for the car and more flexible mileage limits to suit your needs.
3. Decide on a Warranty
Even with a used car, your lease may start with some remaining coverage under the original manufacturer’s warranty. However, it’s possible that the warranty will expire before your lease ends.
During negotiations, consider asking the dealer to include an extended warranty that lasts for the full lease term. If the dealer doesn’t agree, you might consider purchasing extended coverage to avoid unexpected costs.
4. Consider Other Add-Ons
Dealerships often offer add-ons such as paint protection or maintenance plans. Try negotiating to have these included for free.
If that’s not an option, ensure you don’t overpay for extras, especially since you may return the car at the end of the lease. Many add-ons may not be essential for a vehicle you only plan to lease for a few years.
5. Understand Your Obligations
While saving money on a used-car lease is appealing, it’s important to understand your responsibilities.
Mileage Limitations: Stay within the agreed mileage limits to avoid additional charges.
Wear and Tear: Keep the car in good condition, as excessive wear can result in penalties.
Maintenance: You may need to cover additional maintenance costs, especially if the car’s warranty expires during the lease.
Finally, decide whether you want to buy the car at the end of the lease or return it to the dealer. Keep in mind that returning the car might involve extra fees.
Final Thoughts
Leasing a used vehicle is an alternative worth exploring for many drivers. It combines the flexibility of leasing with the cost savings of buying a used vehicle. If you’re considering this option, work with a dealer that offers CPO vehicles and take the time to compare lease agreements. With careful planning, leasing a used vehicle could be the ideal choice for your driving needs and budget.
FAQs
Is it harder to rent a used car than a new one?
Not necessarily. However, it may take more effort to find dealers that offer used car rentals.
Do all dealers offer used car rentals?
No, used car rentals are less common and usually limited to specific dealers.
Can you rent a used luxury car?
Yes, many dealers offer CPO luxury car rentals, making them more affordable.
Are there mileage restrictions on used car rentals?
Yes, most used car rentals include mileage limits similar to those on new car rentals.
What are the typical fees associated with used car rentals?
Typical fees include acquisition fees, security deposits, and possible lease termination fees.
