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Should you Lease or Buy a Used Car?

In General by Josh S0 CommentsLast Updated: May 5th, 2019

lease a used carThe first thing you need to consider is the age of the car and the mileage done.

Most of the used cars available for lease are more than 4 years old with a mileage of fewer than 48,000 miles. They should also be in good condition. Many people will lease a used car because it is a cheaper option than purchasing new. Luxury car models fall under this category.

A car with an initial cost of over $50,000 may be beyond the budget of most people but when you lease it after 4 years the monthly lease repayments are affordable. Most of these cars available for sale tend to retain their resale value.

The problems arising from leasing an old car include: the cost of maintaining the car is more than a new car. This is due to wear and tear. You will also pay more for warranties.

Contact a car dealer

The first person you can contact for help in leasing on an old car is your local car dealer. Since they spend their time selling cars they can identify the right car model depending on your budget. Most of the dealers have the option of old cars but you need to confirm this.

Car lease swap

alfa romeoThere many people who at the middle of an existing lease may desire to opt out before expiring of the term. They could be induced by a better car model or have difficulty making payments for their current lease. You can swap the lease and choose to repay the remaining payments. Before the advent of technology, it was difficult finding someone to swap a lease with but nowadays there are many websites that offer lease swap contracts.

Another advantage of getting a car swap is that you do not need to make a lease deposit as this has already been provided for by the previous owner. You will save some more because all you will be required to do is make the monthly payments.

Certified pre-owned cars

When a car is more than 4 years old it is certified as a pre-owned car. The basics for a lease term are similar to what you have in a normal lease. Firstly, the dealer will determine the resale value of the car and use this to calculate the monthly lease repayments.

The rates will also vary depending on the interest rate( in leases its called the money factor), depreciation rate and there some states where you will be charged a sales tax. A used car means you spend less on lease repayments.

Just like new cars do a background check on the market value of the car you intend to purchase. You can then use the price as a benchmark during negotiations.

Pros of leasing a used car

Reduced monthly payments: this is the major reason why people will opt for used cars. The monthly payments are lower than in a used car. The reason for this is the depreciation rate. It is high during the first two years of a new car purchase but gradually declines as you continue using the car. If you are leasing a car that has being in service for 4 years it means the depreciation is at its lowest.

Acquire expensive car models; for the working class there some car models that are just beyond the reach of most people. These cars will require you to get large financing just to drive off with them. However, you can get to own that car for a while by getting an older model version.

Buy a car at end of lease: the low depreciation rates makes the car have an affordable purchase price at the end of lease. If the car is well maintained and you like it you can opt to purchase it at the end of your lease. In addition, you get to benefit from the powertrain warranty. This gets you covered up to 100,000 miles. Buying the old car means you can continue enjoying the warranty.

Swap current car for upgrade: the best part about getting a lease for an old car is that you can choose to get an upgrade for a better model without finding another dealer.

Lower auto-insurance costs: the challenges of getting a new car include high insurance costs. Due to the increased depreciation and market value of the car, you end up paying less for auto-insurance costs.

Cons

Maintenance costs: old cars have unexpected repair costs. unlike a new car, where you can drive the car for miles without changing anything an old car is always up for repairs. You may find yourself changing the tires or having a new bodywork. These maintenance costs are what makes many people opt for a new car instead.

Psychological factors: cars are status symbols and nothing announces your presence before friends like a new car. Everything is new – from the seats, tires, exterior to the engine. Having a new car is the desire of many people and the fresh smell of leather makes some people not to go for an old car lease.

Modern features: car designs change every year. An old model may lack some of the latest technological advanced technologies like satellite navigation, Bluetooth or safety features. While you can always install some of these features, they do come at an extra cost.

Conclusion

Many people have lived on the presumption that only new cars are available for lease. However, there is an increasing number of old cars available. You can acquire an expensive old car for lease and this means you make little monthly lease payments. The same rules of leasing apply when you are calculating the lease terms. The added advantage is that the car has experienced higher depreciation rates during its first years.

This means it has a lower resale value. Getting a used car lease means that you will be incurring more maintenance costs. You will also not get to experience the newness that comes with owning a new car. Lastly, an old car does not come with the latest car technological features and you may be forced to upgrade them.

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