Can You Lease A Used Car? Everything You Need To Know
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Are you considering a new vehicle but aren’t sure you can afford something brand new? Used-car leases are a little bit of a hidden gem in the car world. They’re not available at all dealers, and you’re not likely to find them promoted online or elsewhere. Even dealership employees may be unaware that leasing a used car is a possibility. So the short answer to the question “can you lease a used car?” is yes.
What is a lease?
A car lease is essentially a long-term vehicle rental with conditions and limitations attached. When compared to a financing plan, leasing can provide well-qualified customers with reduced monthly costs. However, the principal advantage of leasing is also its disadvantage since you do not own the car by default at the end of the lease term.
While leasing allows drivers to avoid making long-term commitments when financing their vehicle, it does not provide the same level of equity that purchasing a vehicle does. Furthermore, each lease contains a set of stipulations and obligations that must be met in order to avoid financial penalties.
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How do you lease a used car?
It could be feasible to lease a slightly used version of the vehicle you’re interested in and save hundreds of dollars in the process. Don’t panic if you’ve never heard of a used-car lease. The majority of individuals haven’t. Used car or “nearly new” car leases do exist, and for those willing to put in the effort to find one, the payoff may be more than just money. Because the savings from a used-car lease may be so substantial, it’s an attractive alternative to purchasing new, used, or doing a traditional lease.
According to Experian data, a little under one-third (29 percent) of vehicles financed or purchased in the fourth quarter of 2018 were leased. But used cars accounted for only approximately 4% of the leasing market.
Used vehicles are most commonly offered for leasing from dealerships with certified pre-owned (CPO) vehicles with less than 48,000 miles and less than 4 years old. Leases for used cars have the same fundamental structure as leases for new cars. The lender will calculate the residual value of the car and calculate the payments based on the difference between the sales price and the residual value.
Because not all cars lose value at the same pace, residual values can significantly vary. Some important things to consider when asking yourself - can you lease a used car:
- It’s possible that your monthly leasing payments will be lower.
- You should do some research.
- It’s possible that the vehicle isn’t covered by a warranty.
- Keep in mind that you are still leasing a vehicle.
- You might not be a good fit for a used-car lease.
Step by step guide to leasing a used car
Do your initial research
Whether you have your heart set on a vehicle from a specific manufacturer or are just searching around, contact a dealership to see if it provides leases on used certified pre-owned vehicles. It’s easiest to ask for the finance or customer care number.
Compare makes that do offer used car leasing
Just like buying a new car, when you’re looking into used-car lease options, you’ll need to determine whether it is a decent deal. Get a lease quote for both a new version lease and compare it with the used-car lease. Keep in mind that because you’re shopping on the used market, you might not be able to locate your chosen color scheme or feature combination right away. There aren’t as many used leasing vehicles to choose from and may require some extra patience.
Due to the reality of limited used-vehicle leasing locations, finding a dealership that can assist you will likely require some time and effort. It’s possible that you’ll have to contact a few to locate one that can handle these leases.
Price comparisons for automobiles
It’s critical to do some research on the car’s value before signing any contracts. You’ll need the leasing price for both the new and used model, as well as an estimate of how much it’ll be worth at the end of your lease.
Leasing costs
Remember these two elements to understand how the dealership determines lease interest rates:
- Vehicles lose significant value over time.
- It is necessary for the dealership to generate a profit.
An additional factor to keep in mind is that finance rates are typically much higher for used cars than brand new vehicles, but if you check around, you may be able to find a dealership that offers similar or equal rates.
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The advantages of leasing a used car
- Lower costs
- Variable leasing periods
One of the advantages of leasing a used car is keeping low costs. Leasing a used car is generally less from the initial investment charges to the monthly rate, allowing you to purchase a car in a higher class than you might otherwise afford.
Another advantage of leasing a used car is that it requires less commitment than leasing a new car. Dealerships can set you up with a lease period that matches your needs, and once the leasing period expires, you have no further obligations to the car.
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The disadvantages of leasing a used car
While leasing a used vehicle has numerous advantages, it also has some disadvantages. When you lease a car, you’re basically renting it and won’t be claiming any ownership benefits at the end of the term. Although buying a used car may save you money in the long run, you will still have to pay for acquisition fees, a deposit, a warranty policy, and additional insurance upfront.
When leasing a used car, the warranty is likely to have expired, and as the lessee, you will be solely responsible for keeping the vehicle in good operating order. The advantage is that most used automobiles do not have a mileage limit, making them a better option than leasing a new car if you plan on traveling frequently. Just like any car purchase, it’s an important decision that will require some financial planning and time to find the right vehicle for you. You can lease a used car, and it is worth looking into if dealerships in your area offer it.
Get a Curated List of the Best Used Cars Near You
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