Can You Lease a Used Car?


It’s a little known fact that you can often lease a used car instead of buying or leasing new or buying used. In fact, it very well could be your best option financially.

It’s a little known fact that you can often lease a used car instead of buying or leasing new or buying used.Right now, at about four percent of all vehicle transactions, used car leases are still a small part of the market, according to Experian. This could be in part because no every manufacturer and dealership offer used car leases. Furthermore, as a rule, used cars available for lease from franchised car dealerships must be certified pre-owned (CPO) vehicles that are less than four years old and have fewer than 48,000 miles on the odometer, which limits the field of available options. However, as an effective way of getting more people into used vehicles, the market share will likely grow as more manufacturers embrace the concept and offer incentives to lease used, as they did with new vehicles.

“There’s no doubt that this is going to grow,” said Kyle Thibaut of the online used-car buying service Beepi. “We’ve seen the activity and the buzz around it to be more than expected, so I can only expect this to grow as the used supply coming back from new leases continues to be at all-time highs. It’s going to be a very favorable environment for used-car leasing.”

Why so popular? Edmunds.com Senior Consumer Advice Editor Matt Jones said that in his experience, consumers have saved $40-$125 per month from their monthly payments by opting to lease used instead of new. John M. Vincent of U.S. News & World Report summarized how that is possible:

“With a lease, you’re just paying for the anticipated depreciation, plus a money factor (interest) and fees. Since most cars have their fastest depreciation during their first three years, leasing after that rapid depreciation lowers the car’s value and can save you thousands,” he explained.

Along with the lower monthly payment, other benefits of leasing used include the potentially lower auto insurance costs (due to the reduced value of the vehicle) and longer powertrain warranty, as a CPO vehicle tends to have warranties up to 100,000 miles. This is an even better advantage for those who may want to buyout the car after the lease ends. Used leases are also great candidates for this because of their lower value, making their residual values lower as well. Additionally, Thibault said mileage restrictions tend to be more lenient than new car leases.

“We can offer lower monthly payments and more flexibility,” he said to NBC News. “You get a lot of savings and a fairly new vehicle.”

Of course, there are drawbacks too. You have to put in some extra legwork to find a dealer who offers used car leasing. Also consider maintenance costs, as a vehicle with higher existing mileage will likely need to visit the repair shop sooner than with a new car. Finally, you don’t get to experience that “new car smell”—while it may be new-to-you, it will not be in mint condition and may even come with the occasional scratch, stain or ding.

Even more homework you would be remiss not to do is to research and plan out if leasing a used car is the best option for you—sometimes dealer incentives on new cars, along with previously discussed circumstances, make buying or leasing new a better deal. Be sure to contact your local dealer with questions or for more information.

 

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