Leasing a car is essentially paying for the privilege of driving a car without buying it. When it comes to leasing cars, a lot of people assume that only new cars are leased. This leads to the question — can you lease a used car? Although it’s less common, you can, in fact, lease a used car.
The biggest benefit of leasing a used car, is potentially lower monthly payments. The payments made on a lease go mostly to the expected depreciation of the vehicle. Since cars depreciate the most in the first year, used car lease payments should be smaller than those on new vehicles. On the other hand, a lease on a used vehicle may not include the same manufacturer warranty or maintenance coverage as a new vehicle or have the latest safety features and technology.
How do you lease a used car?
Figure out your budget
Before you decide on a car, first you need to ask yourself, “What can I afford?” Once you’ve nailed down a budget, use it to guide your search. Look at all the costs of leasing a vehicle (down payment, monthly payments, mileage fees, maintenance, etc.) and compare them to your budget. It’s important not to assume leasing a used car is a good deal just because it’s cheaper than buying or leasing a new vehicle. You still have to consider all of the costs that come with leasing a vehicle compared to the cost of buying the same used car.
Choose the right vehicle
One major downside of leasing a used car is that it’s older and may have more maintenance needs than a new model. You want to look for a car that holds its value, has good reliability, and doesn’t have a history of major problems. Some dealerships offer Certified Pre-owned vehicles which come with an extended manufacturer warranty. These vehicles can help keep your monthly payments and service costs as low as possible.
Find a dealership that can lease a used car
Not all automotive financers offer used vehicle leasing. You may have to shop around to find a dealership that both leases used vehicles and has the vehicle you want (in the budget you need).
Check out the car before you lease it
Many companies offer reports of a vehicle’s history, including accidents and service incidents. Knowing about any prior maintenance care and accidents can help you anticipate future issues with the vehicle. Of course, test drives are always recommended as well.
Negotiate the price
You work hard for your money, so you want to make sure you are getting the best terms you can on price. While you might think you can only negotiate when you buy a vehicle, it’s also an option when you lease a vehicle — either new or used.
While you can negotiate a lot of options when you lease a used car, these two factors can help keep your monthly costs down and help you get the most value out of your lease:
- Capitalized costs: This is the total financed cost of a lease, including the negotiated vehicle price, add-ons, and fees.
- Mileage allowance: Lease agreements contain limits on the number of miles you can drive in the car. If your mileage allowance isn’t enough for your needs, you may be able to negotiate a larger allowance in your agreement.
What companies offer used car leases?
Again, not all dealerships lease used vehicles, but some do. Often, used car leases are not advertised — instead, you have to ask for it. Dealerships may have higher-end vehicles that hold their value well, and many carry certified pre-owned vehicles, meaning they’ve passed a particular list of standards for used cars set by the dealership or manufacturer.
A lease swap is a transfer of a lease from one driver to another. In a swap, the new driver could take over the same terms and conditions on the lease agreement as the original driver, if approved. You may want to consider a lease swap if you don’t want any long-term lease commitments or if you’re looking for a good deal for leasing a used car.
Be careful, however, because you could also get stuck with a car that has undetected problems or has already used up most of the mileage allowance. You will want to both review the lease agreement and inspect the vehicle in order to avoid getting stuck with an excess mileage penalty or undetected wear and use. It is important to note that many automotive financers (lessors) do not permit lease swaps.
Pros and cons of leasing a used car
- More affordable monthly payments when compared to leasing a new car.
- Easier to afford more expensive luxury models.
- Won’t get the newest models/safety features.
- May not be covered by manufacturer warranty or maintenance.
- The option to lease a used vehicle may be hard to find.