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How to lease a used car
Ideal if you're on a budget or want to drive a luxury car for less.
Used car leases are gaining popularity thanks to certified preowned (CPO) car programs and lease-swapping websites. Because they offer the same flexibility as new car leases at a fraction of the price, you may be able to get behind the wheel of a low-mileage or luxury vehicle without breaking the bank. But they don’t always come with a warranty, and you’ll have fewer cars to choose from.
First, how does a used car lease work?
A used car lease works just like a regular lease — you pay to drive a specific vehicle for a predetermined period and number of miles. But unlike leasing a new car, you’ll face a much lower buy-in cost and lower monthly repayments. This type of lease is ideal if you’re on a budget or want to drive a luxury car without having to pay thousands out of pocket.
Follow these steps to get behind the wheel of a leased used car:
- Contact a few dealerships that offer used car leases and explore their selection of vehicles available.
- Request quotes from multiple dealerships based on your chosen lease term and mileage limit.
- Choose the lease deal that benefits you most, whether you’re looking for a low APR, minimal down payment or cashback bonus.
- Discuss your lease-end options, and if happy with the terms, sign your lease agreement.
What’s the difference between a new car lease and a used car lease?
The main difference between leasing a new and used car is in the monthly payments. Because used cars are worth a fraction of the price of new cars, you won’t have to pay as much when you opt for something that already has a few thousand miles on it.
Here’s an example to see the differences in cost between leasing a new versus used car:
Cost of leasing a new car
Let’s say you’re ready to lease a brand-new $26,000 car. Over the course of a three-year lease, it will likely depreciate in value by about 30%, leaving you leasing a car worth only $18,200. You monthly lease payment will be based on the amount your car will depreciate in value — $7,800 — as well as any leasing fees. This would leave you with a monthly payment of around $216.
Cost of leasing a used car
Looking at the same car after those three years of depreciation, you’ll start by leasing a car worth $18,200. Using that same three-year lease term, your car would depreciate in value by about 20%, giving the car a residual value of $14,700. In this case, a $3,500 depreciation would give you a much lower lease payment of around $96 a month — less than half the cost of leasing a brand-new model.
Where can I find a used car lease?
Used car leases aren’t the easiest to find, but there are a few good places to begin your search:
- Manufacturers. Some car manufacturers — especially luxury automakers — offer used car leases through their CPO program. If you have a specific car in mind, check with the manufacturer first to see what kind of deal you can get.
- Dealerships. Although it’s still somewhat uncommon, dealerships are beginning to offer leases on used cars. Reach out to a few in your area to see if any offer this option.
- Lease swaps. Online companies like Swapalease have started offering people the ability to swap leases. Basically, you take over someone else’s lease — including the payments and maintenance. This is ideal if you’re looking for a shorter lease term or want to avoid the large down payment required by some contracts.
What are the benefits of leasing a used car?
From lower monthly repayments to more competitive insurance rates, there are a few perks that come with leasing a used car:
- Pay less overall. Monthly payments tend to be lower, and you don’t risk losing as much with a used car if the market shifts and car values plummet.
- Easy to upgrade. When you lease, you won’t have to go through the hassle of selling a used car. Instead, you’ll have already agreed upon a set buyback price, making it that much easier to switch to something new when your lease is up.
- Competitive insurance rates. Insurance premiums tend to be lower for used cars simply because the overall value is lower. This means not only are you paying less overall, but you also won’t have to budget as much for insurance.
- Luxury cars at a more affordable price. Although it may not have the most up-to-date technology, leasing a used car gives you the opportunity to get behind the wheel of an Audi or Lexus without having to pay the hefty price tag — and depreciation — that comes with new luxury vehicles.
What are the drawbacks?
Just because used car leases are generally less expensive doesn’t mean they’re the right choice for everyone. Consider these potential drawbacks before making a decision:
- May lack a warranty. Unless you opt for a CPO car or you choose a manufacturer that covers used cars under its initial warranty, you’ll have to pay for an extended warranty on your lease.
- Responsible for maintenance. Not all leasing companies cover maintenance costs, which means you could be responsible for oil changes, tire rotations and other expenses to keep your car running smoothly.
- Less selection. Because used car leases aren’t common — although that is changing with lease swaps — you’ll likely find that you have much less selection than you would if you opted for a traditional new car lease.
- Could be previously damaged. If the car you choose to lease was damaged by its original owner, it can impact the aesthetics of your ride. While most reputable leasing companies should have fixed any major mechanical issues, you should still check the vehicle history report before signing a contract.
Used car leases often come with lower monthly repayments and more competitive insurance rates — making them ideal for drivers on a budget. But they aren’t as common as new car leases, meaning you’ll have fewer vehicles to choose from.
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