Leasing a factory-fresh new vehicle appeals to many consumers thanks to lower monthly payments and always driving the latest models. But leasing a used cars has grown more common too. Dealers now offer lease options on certain used vehicles, often labeled “certified pre-owned” (CPO).
Used car leases unlock affordability while accessing nicer rides than possible when buying used outright. But significant caveats exist around leasing pre-owned that buyers must consider too. Let’s explore the used car lease landscape – who offers them, benefits and risks, tips for securing the best deals, and what steps lead to happy used leasing. There is always the right time to lease a car in the market, let’s learn how to lease a used car.
Understanding Leasing and Used Car Terminology
First, a quick leased car primer. Leasing means paying to drive a vehicle you don’t own for a fixed contractual period, usually 2-4 years. Monthly payments mainly cover expected depreciation plus interest and fees. When the term expires, you return the car unless buying it separately.
Certified pre-owned vehicles describe lightly used cars passing stringent inspections and reconditioning to meet factory specifications. Most carry extended manufacturer warranties too. CPO cars typically lease originally, trade hands quickly the first time, or get off-leased from the first renter.
The Potential Benefits of Leasing Used Vehicles
Assuming you locate an appealing CPO car to lease, what incentives exist over new leasing or used purchases?
Lower Monthly Payments
The prime motivator for lessees is slashing their monthly car outlay. Since used vehicles already absorbed initial year massive depreciation hits, their lower residual values yield cheaper monthly rents. Lessees gain access to newer cars for less than buying outright.
Access to Newer Model Years and Luxury Vehicles
Pre-owned leasing also lets average income drivers experience nicer rides. Opting for a leased CPO luxury sedan seems reasonable when used pricing hovers in budget territory versus MSRPs double your pay grade. Without leasing, aspiring to a certain badge cachet remains unrealistic.
Warranty Coverage on Many CPO Lease Options
Seeking mechanical protection offers another leased used calculus. Most certified pre-owned vehicles sold or leased today carry included 1-yr/12k-mile powertrain warranties minimum. Manufacturer backing eliminates some repair risk that buying straight used lacks until you tack on separate policies.
Flexibility at Lease End to Buy, Renew, or Walk Away
Lastly, leaning on lower used vehicle values provides more flexibility when leases end. Upside exists to capture ownership beneath original MSRP by buying leased CPO cars well-maintained with your known history. Or you may pocket equity selling it independently. Less liability also comes with surrendering the car if buying proves undesirable.
Key Drawbacks to Consider Before Leasing Used
Alongside advantages, used leasing brings limitations shoppers must weigh before proceeding:
Excess Wear and Tear Fees
Unlike buying used outright, leased vehicle condition at contract end faces intense inspection. Dealers detail any defects or missing equipment needing remediation. You must negotiate repair costs or pay steep pre-set refurbishing fees itemized by dings, tears, large scratches, and mechanical defects.
Limits on Customization and Modifications
Speaking of condition, certified pre-owned leases prohibit anything beyond minor accessories like floor mats before mandatory return to near ex-factory standards. No performance mods or appearance alterations that dealers must reverse permitted. Buyers enjoy more customization freedom.
Responsibility for Mechanical Repairs and Maintenance
Lessees remain on the hook for all repair costs outside limited CPO warranties, including wear maintenance like brakes or tires. Buying used shifts this burden to you much later once your extra warranty purchased expires. Budget for surprise used car repairs hitting earlier with leases.
Early Lease Termination Penalties and Expenses
Breaking used leases proves costly if life changes force an exit. Expect to pay entire depreciation amounts owed, plus added hundreds to thousands in early termination fees. Buying then reselling used outright allows stopping payments and recovering some equity at any point.
Mileage Overage Fees
Both used and new leasing enforce strict annual mileage limits with charges from $0.10-0.30 per extra mile driven. Carefully projecting usage avoids expensive overage surprises down the road. Used cars bought lack mileage penalties as ownership cedes control.
In summary, cheaper used lease payments must be balanced against greater wear risk, customization barriers, payoff opacity, and lack of sale flexibility relative to used purchases. Your driving plans determine what works best financially.
Where to Find Used Car Lease Deals
Now that we’ve covered pros and cons, where can you actually locate used vehicle leasing options?
Franchised New Car Dealerships
The most common CPO lease providers remain factory-authorized dealers of that same luxury make. So BMW offers the widest selection of certified pre-owned BMW leases thanks to trade-in sourcing and assuming others’ BMW Financial leases. Mainstream brands operate similarly.
Used Car Chains Offering Lease-Purchase Options
Certain used car mega-dealers like CarMax offer lease-purchase options on some of their verified models not reaching CPO designations. This allows another lease route if new dealer inventories fall short. Just verify included condition coverage.
Online Lease Transfer/Swap Services
Alternatively, you could find used car lease takeovers matching your targeted used car models via sites like SwapALease. Owners wanting out of current leases early list vehicles that you assume contractually. Some haggling happens over payment and condition.
Independent Buy Here, Pay Here Lots
Lastly, very subprime used car lease situations exist at buy here, pay here dealers pawning aged, high-mileage vehicles. But sky-high payments, zero included maintenance, and ironclad contracts make these the least advisable used leasing option short of total desperation.
Tips for Getting the Best Used Car Lease
If going the used lease path, what tactics secure you the best situations? Consider these keys to used car leasing success:
Assessing All Fees and Fine Print Conditions
Avoid surprises down the road by reviewing all lease documentation language and clearly understanding fees assessed for different in-term lease changes and end-of-lease damage charges. What wear-and-tear constitutes “excessive”?
Inspecting Vehicle Thoroughly Before Signing
Since used leases hold you accountable tying conditions with required fixes or reconditioning fees, inspect paint, body, interior, electronic features, and mechanical operation ahead of signing anything. Test drives, vehicle history reports, and third-party inspections provide that confidence.
Checking Special Financing Rates for Bad Credit
Don’t assume used car lease approvals require pristine credit. Many franchised dealers offer special rate tiers on certified pre-owned lease or purchase deals to those overcoming prior challenges. Know how to lease a car with bad credit and be vigilant to explore used options even with scores around 600.
Understanding Repairs/Warranties Included or Excluded
Finally, read the fine print! Some CPO leases bundle free maintenance plans, while others confirm key powertrain components sit protected for defects. But brakes or bulbs may prove your responsibility. Compile covered and omitted repair scenarios.
Key Guidance on Making Used Car Leases Work
The landscape of where and how to find used auto leases continues evolving to align consumer budgets with desires for newer transportation. Core guidance includes:
- localized dealership searching uncovers most available inventory
- online aggregators add visibility to wider sourcing options
- lease-to-own programs bridge flexibility for certain shoppers
- inspecting specific vehicles before signing remains mandatory
Ultimately, the more well-versed you become around the niche used car lease process, the smoother success arrives. Those able to accurately forecast budgets for real-world used ownership costs against their lifestyle gain the greatest wins. Happy hunting for the right used car lease!
FAQs
Does leasing used save money versus new cars?
Yes, choosing to lease lightly used vehicles instead of brand new can yield substantial savings. Used cars already absorbed initial first-year massive depreciation allowing cheaper monthly rents thanks to lower residual values at lease end.
Do used car leases have mileage restrictions?
Yes, used car leases enforce the same annual mileage limits as new car leasing, charging overage fees of around $0.25 per excess mile driven. Carefully consider your yearly driving needs before signing any used car lease capped at only 10-15k yearly.
Can I negotiate a used car lease with dealers?
Lease terms prove more flexible than assumed if negotiated properly upfront. Many components like capitalized cost, money factor (interest rates), lease length, fees, and mileage allotments remain open for discussion even on used cars.
What credit score is needed to lease used vehicles?
Used car leasing mandates fair credit of at least 600 FICO score for approval odds to rise beyond 50 percent. However, specialized subprime lenders offer deeper buying protections with scores around 500-550. Improving your credit expands options.
Should I lease used car for only 12-24 months?
Very short 1-2 year used leases better protect against mechanical issues and mileage overages. But expect above-average monthly payments due to compressed depreciation assumptions. Carefully weigh higher rents against lowered repair risks in your situation. 36 months works best for most lessees.
What are the main drawbacks of leasing a car?
Some of the top reasons not to lease a car include strict mileage limits, lack of ownership, expensive early termination fees, responsibility for excess wear and tear costs, higher effective interest rates compared to purchasing, and inability to sell or trade-in the car.
