Car leasing has become a popular option among people who want to drive new cars without making a big down payment, but still allowing them to spread the cost over a longer period of time. Skeptics of car leasing point to the fact that you spend all this money but you never actually own the car or gain any meaningful equity in it. They’re not wrong, and it’s true that car leasing isn’t for everyone. For a great swathe of the population, however, car leasing is a terrific choice.
Can You Lease a Used Car?
Yes, it is possible to lease used cars and not just brand new cars. You have to find a dealer that is leasing used cars, though.
Many tend to think of car leasing as something that one does exclusively with brand-new cars. In fact, there is also a great availability of used cars that dealerships are willing to lease to willing drivers. In today’s blog, we will be looking at the used-car leasing market and how it works, as well as studying some of the pros and cons that go with leasing used cars.
How Do You Lease a Used Car?
In this section, we will cover the various steps necessary to get the best deal on a used-car lease. They are a common thing that people seek, but finding one is a little more involved than getting a brand-new one.
1. Choose a Channel
There are two main sources through which you can find a great lease for a pre-owned car. The first and probably the safest channel is to go through a dealership. Dealerships have stocks of used cars, some of them that have just been returned from their first 3-year leasing period. The dealership has an option to either sell them or lease them again. Where cars can be sold, they will certainly do that, but at times leasing is a more attractive option, and helps them control their stocks just the same.
The second channel is a lease transfer platform. There are some web-based platforms such as swapalease.com and leasetrader.com that specialize in connecting individuals who wish to get out of their current lease and those who are looking for a good leasing deal. The deal is that you take over someone else’s lease and continue for however long is remaining on the contract.
2. Research Residual Values and Negotiate
Whether you’re leasing a new car or a used one, your monthly rate calculation begins with how much the car is currently worth. This is the reason that a used car lease, especially from a dealership, is a great option because you should be able to get a much better deal with the car having lost up to half its value. Cars lose 20 percent of their initial value in the first year, and a good deal of that happens the moment you leave the dealership.
When you have clarified the car’s average value based on its make, model and year, you then have a good starting point from which to work and it will help you greatly in working out whether or not you are being taken for a ride by the leasing company.
3. Get an Inspection (or Report)
Any used car you are leasing, especially from the dealership, should come with an inspection report to indicate that the car is roadworthy and free from any major technical faults. Getting an inspection on the car is a common thing to do when buying a pre-owned vehicle. Why should it be any different when leasing one? Any reputable dealership should be happy to supply you with this report as a way of proving the quality of the car.
4. Buy a Warranty and Insurance
Though you are only leasing the vehicle, you will still be responsible for any repairs or maintenance that are required on the vehicle while you have it. Leasing a brand-new car means you don’t need to worry about that so much, since the car is certainly still covered by its manufacturer’s warranty. Plus, there are just far fewer things that either go wrong or need performing regularly on a brand-new car.
Therefore, when leasing a used car, remember to also get the price for a warranty on the car. You will also need insurance for it. Not every leasing company offers you an “all-in-one” service, meaning that the coverage of the car with insurance, warranties and whatnot will be down to you.
5. Go Through Entire Contract Before Signing
Before you take on a used car lease, it’s essential that you read through the leasing agreement and understand all the terms and conditions. This is doubly important when taking over someone else’s lease, the conditions for which were negotiated some time before by people who were not your good self. Check all the requirements, payment information, and in particular under what conditions you might be able to exit the lease should the need arise.
It’s not as though you are going to terminate your lease, but circumstances can change pretty quickly and a day will then come around on which you might want to get out of the lease or transfer it to someone else. In that case, it would be better if you were familiar with all of the conditions.
Pros and Cons of Leasing a Used Car
The truth is that the pros and cons of leasing a used car are mostly the same as when leasing a new one, but with some added bonuses. Let’s begin with the Pros of leasing a used car:
Pros of Leasing a Used Car:
- You can raise your sights to a higher-level model. Just as leasing a car generally opens up the door to a higher-level trim of a car you’re interested in, leasing a used car opens up an even bigger selection of vehicles. In fact, it’s because higher-end vehicles like a Lexus or Audi are better at holding onto their value overall that makes them an attractive leasing option for dealerships. They can continue to make money on a car through leasing but it’s also a much better deal for you.
- The varying times left on leases mean you can get very short leases if you want. A typical car lease is three years, but if you take over someone else’s lease, then you have the option of choosing a deal where the time remaining on the lease isn’t too long. This is a great thing if you just need a car for a short time but don’t want to lease something new or pay a top-end leasing rate just for a short period of time.
- There’s no need to worry about resale. This one applies whether you’re renting new or used, but it’s arguably more of a pronounced benefit when taking on a used car lease. Selling a used car can be more troublesome than a newer one because a newer one always looks more attractive to a quality buyer. When leasing, this is something you never have to think about. When the time comes, you can pay the residual value and own the car, or trade it in for something else directly. Either way, there will be no advertising, selling or transferring of car titles and whatnot when you’re dealing with leases.
Cons Of Leasing a Used Car:
- The insurance and the warranty can be more expensive. Very often people prefer to buy liability-only insurance on many pre-owned models because they feel comprehensive insurance is too much for an older car. It does depend on the car’s age. Taking on a lease you might be compelled to take on more expensive insurance. Furthermore, the warranty for a used car will certainly be more expensive as well. The older the car is, the more risk of things breaking down and thus the greater risk for the manufacturer of losing money.
- There are additional fees involved when getting a lease. It can cost you as much as $895 just to get your hands on your used car lease. You’re more likely to have to deal with this problem if you take over someone’s lease. The leasing/finance company might charge what they call an “acquisition fee.” Dealerships often have something similar, too.
- A used car is a greater maintenance risk. While new cars on lease can be pricey in the long term, you can mitigate some of that financial loss by not having to take the new car to the auto shop for maintenance at anywhere the same rate you would do with an older car. Once cars cross the 2- or 3-year line in age, the maintenance costs start to go up. You might have a warranty on the car, but it won’t cover basic maintenance.
Conclusion: Used Car Leasing – Worth It For Many
Just like leasing a new car, leasing used cars is not something that is suited to every driver or family. For those who want flexible terms on their car with lower monthly payments, leasing is a good choice. What’s more, the chance to find a lease for just a few months because they’re temporarily living in one location or because they’re testing the vehicle thoroughly before buying a new one later on makes it an even greater option.
Visit local dealerships to learn more about used car leasing deals.