Do you like the benefits of leasing but want to save more money? Used cars are now available for leasing at some dealerships, and you can get in on the action.
Vehicles are more expensive than ever, and these high prices, along with several other factors, are leading dealerships and the financial institutions they work with to get more creative. Used car leasing is one of their solutions. Take a look at how it works.
Leasing Is Making a Comeback
Traditionally, leasing has been a good way to lower monthly car payments and get into a new car. You drive it for two or three years and then bring it back or buy it.
The payment is based on the initial price, the estimated value at the end of the lease, and the number of months you’ll drive it. With new car prices so high, paying to use the car for just a few years is significantly cheaper than paying for the entire car.
How Does Leasing a Used Car Work?
Leasing a used car works the same way as leasing a new car. A growing number of dealerships are now offering leases on vehicles that have come back from an initial lease, which are often labeled Certified Pre-Owned. CPO vehicles are less than four years old and have fewer than 50,000 miles on them in most cases. The dealership’s service center has performed a multi-point inspection on the vehicle to ensure that it’s in excellent condition.
The lease agreement for used cars includes a money factor, or interest rate, just like a new car lease, and the payment will be based on this along with the sale price and residual value. The residual value is a little trickier to calculate with a used car than with a new one since not all cars depreciate at the same rate.
Who Should Lease a Used Car?
Do you like the idea of updating your vehicle every few years? If this appeals to you, you may be a good candidate for leasing used cars. Keep in mind that if you think you may want to purchase the car at the end of the lease, buying it right at the start will probably save you money. But, the upside is leasing may allow you to afford a higher-end vehicle or a higher trim level than you could afford if you buy it.
Since used car leases are on CPO vehicles, which are only a few years old, your used car lease may come with a factory warranty. You may also benefit from an added warranty offered through the manufacturer on their certified pre-owned vehicles.
The Downsides
While there are many benefits to leasing used cars, there are some downsides to consider before signing on the dotted line. The interest rates for used vehicles are often higher than for new cars, and there will be some wear and tear on the car.
Another factor to consider is you may have to pay some out-of-pocket maintenance costs.
If you’re considering a used car lease, it all comes down to your preferences and needs.
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