Leasing a car is the ideal way by which you save thousands of dollars on the same car you have your eye on! Many new cars dominate the market, but leasing a used car can lower your monthly payments further. But wait, can you lease a used car?
Don’t panic if you’ve never heard of a used-car lease. The fact is that not many people have. Used-car leasing isn’t available with all dealers, and you’ll rarely see them advertised offline or online. Nobody may know that leasing a used car is an option, not even those who work at the dealerships.
Used cars are a great option if you want a cheap lease because they depreciate less quickly than new ones. So, can you lease a used car? If yes, should you consider it? We have the answers!
Why should you lease a used car?
The main benefit of leasing a used one is that the price will be lower than that of a new one. The leasing cost depends on the difference between the car’s initial worth and its residual value after the lease period. You must expect that difference to be minor because used cars depreciate more slowly than new cars. As your car’s value plays a vital role in the coverage cost, you will also be able to save money on your auto insurance. Used cars will be less costly to insure compared to new ones.
How can you lease a used car?
Many franchise dealerships allow you to lease certified pre-owned (CPO) cars. Taking over a lease from an existing leaseholder is another approach for used-car leasing. You can see some used cars listed on car matchmaking services like LeaseTrader or Swapalease. Unlike a standard lease, you needn’t make a down payment or upfront acquisition costs.
But there would certainly be a transfer fee, and you would need the present leaseholder’s leasing company’s approval for the lease transfer. However, there are cash incentives that can cover these costs and more. After that, you’ll have to make monthly payments and perhaps pay an amount at the end of the leasing period.
Leasing a used car vs. leasing a new car
The process is the same if you lease through a dealer. You might need to pay an acquisition fee and a down payment initially. Then you’ll start making monthly payments based on the residual value.
The monthly payment includes money factors like the loan’s interest rate. Usually, the rates of secondhand cars are higher than that of new ones. Whatever the leasing type, at the end of the leasing period, you will have to pay a turn-n charge in addition to any penalties for going over the lease’s mileage limits and wear-and-tear policy.
Used-car leasing: How to do it
You should try following these steps to find the best one!
Find a seller
Make sure the car is available by contacting the financing department of the car brand you’re considering or a local dealer.
Strike the best deal you can
You can negotiate over a deal for a used-car lease like a new lease or any other auto loan. Start by bargaining the car’s cost, then negotiate the buying choices, mileage limits, down payment, or trade-in value. Like any other car, be prepared to pay taxes, title, and license costs. The lease may also increase due to acquisition fees, dealer fees, and other expenses.
Decide about the warranty
The dealer might provide an extended warranty in addition to the CPO warranty that the manufacturer provides. Extended warranties, also referred to as vehicle service contracts will cost you extra. Also, check for overlapping coverage before purchasing. It doesn’t seem sensible to pay for coverage you may already receive under the CPO warranty and perhaps the car’s original warranties. Extended warranty costs might range from $1,200-$2,500 or more. Examine the dealer’s offer compared to those made by independent businesses, your auto insurance company, and even some credit unions and car clubs.
Consider extra add-ons
Unlike an optional extended warranty, the leasing firm may demand leasees purchase guaranteed asset protection (GAP) insurance. Suppose your car gets stolen or totaled in an accident. In that case, it will pay the difference between what your auto insurance provider would pay and what you owe on your lease.
Understand your duties
Before signing the agreement, ensure you understand any early termination costs, excessive wear-and-tear charges, and mileage fees. There might be a way to avoid paying the penalty after the lease period by buying extra miles upfront or within a particular time frame. Ask about purchase alternatives when the period ends if you wish to buy the car. The lease agreement should specify the purchase cost based on residual value. It might be a perfect deal if the car is worth more than its residual value.
Pros and cons of leasing a used car
Planning on used-car leasing? Then you should know about the pros and cons!
|Compared to leasing or purchasing a new car, leasing a used car typically involves lower monthly payments.||Used cars typically have a greater money factor than new cars do. Like new cars, manufacturers occasionally offer lease agreements on used vehicles, usually just for high-end models.|
|You might be able to afford a nicer car or a higher trim level by leasing a used car some years old.||Even though CPO vehicles undergo a manufacturer inspection, they show certain signs of wear and tear. They could also be outdated in terms of technology or safety features.|
|Other used cars lack the manufacturer’s warranty that a CPO vehicle does.||You will rarely see an advertisement for it.|
|You could have to spend some maintenance costs out of your pocket as CPO warranties don’t cover brake pads and tires.|
What are the alternatives to leasing a used car?
There are primarily two alternatives.
- Lease swaps: You can find good discounts from customers planning to finish their lease contracts early by using lease trading websites like LeaseTrader.
- Purchasing a used car: When your contract expires, you will be the car’s owner, giving you the choice of either selling it or keeping it till the end. You risk losing money on your loan and being subject to depreciation. However, it’s the quickest method for many to find a low-cost car. Of course, if you fall in love with it, you will probably have the choice to buy it at the end of the lease term. Leasing used cars may be an apt option to make a few affordable monthly payments before committing to a car.
The bottom line
- Leasing a used car may be less expensive than a new one.
- Many auto dealers offer used-car leases, but usually just for CPO ones.
- You can also take over someone else’s existing lease.
Can you lease a used car in Florida?
Yes. Some dealerships do offer car leasing in Florida.
Can you lease a used car in NJ?
The short answer is ‘yes’! You can lease a used car in NJ.
Can you lease a used car with bad credit?
Yes, it is possible. However, it can be difficult for you to qualify for the lease because your credit score is lower.
Can you lease a used car with a 500 credit score?
Leasing is typically only an option for customers with excellent credit. With a credit score of 500 or lower, it will be challenging to lease one. Even with a score of 660, this will be the case.
Can you lease a used car with no money down?
Yes, there are zero-down lease programs available. But that doesn’t imply you can go into the dealership without money and leave with a brand-new car. You must still pay the fees, sales tax, and often your first month’s payment.