Can You Lease a Used Car?

Most people know about leasing new cars, but did you know you can also lease used vehicles? This lesser-known option offers lower monthly payments and puts quality cars within reach that might otherwise strain your budget. Let’s explore what you need to know about used car leasing — from the basics to determining if it fits your lifestyle and finances.

Understanding Used Car Leasing

 

Used car leasing works similarly to new car leasing but with some key differences. “Used” typically means vehicles that are up to 6 years old with under 85,000 miles on the clock, though these requirements can vary by dealer. When you lease a car, you’re essentially paying for the depreciation during the lease period rather than the full purchase price.

Available leasing options include certified preowned (CPO) vehicles, off-lease returns, and demo vehicles. Since these cars have weathered their steepest depreciation already, your payments will stay lower. Many dealers don’t offer used leases, so you’ll need to shop around.

Differences Between Leasing New vs. Used Cars

Used car lease payments typically run 20% to 40% lower than for new cars, making a big difference to your budget. Warranty coverage and selection differ, too. New cars come with complete protection and the latest technology, while used ones may have limited remaining coverage but offer well-established models at a lower cost. While manufacturers often provide more incentives for leasing new cars, some CPO programs offer competitive deals.

How Does Leasing a Used Car Work?

When leasing a used car, payments are based on the car’s current value, not its original cost. Factors such as age, mileage, condition, and maintenance history all affect the lease terms. Most used car leases run between 24 and 48 months, and a higher residual value generally means lower monthly payments.

Having a better credit score will get you easier approval, smaller down payments, better rates, more vehicle choices, and more flexible terms. Leases usually come with mileage limits of 10,000 to 15,000 miles annually. Once the lease ends, you can then choose to buy, return, or extend the lease on the vehicle.

CPO Leasing Programs

CPO vehicles have passed rigorous inspections and repairs to meet manufacturer standards. These vehicles also often come with additional warranty coverage. CPO leasing programs vary by manufacturer. Currently, Acura, BMW, Buick, Cadillac, Chevrolet, GMC, Honda, Lexus, and Toyota all offer CPO leasing programs through franchised dealers.

CPO leasing accounts for about 8.5% of auto leasing, appealing to budget-conscious shoppers. While costs tend to run higher than for regular used leases, the added warranty protection gives peace of mind.

A Step-By-Step Guide to Leasing a Used Car

First, do your research. Look for cars, check their value, and understand the lease terms. Make sure to contact dealers directly, as not all offer used car leasing. To apply for a lease, you’ll need the following documents:

• Driver’s license
• Proof of insurance
• Income verification (pay stubs, W-2 forms, bank statements, or tax returns)
• Residence verification (utility bill, mortgage statement, or lease agreement
• Employer contact information
• Social security number
• Banking information
• Proof of identity

Once you’ve found a car you want to lease, inspect it carefully and check the maintenance records to ensure it meets the age and mileage standards. After that, you can negotiate the terms of the lease. Approval typically takes 24 to 72 hours, though many applicants receive same-day responses.

Be sure to read your contract closely, paying attention to mileage limits, wear policies, and end-of-lease options. Taking photos at the time of delivery can protect you at lease-end.

Negotiating the Best Terms

You can negotiate various aspects of your lease, including the vehicle’s selling price, interest rate, mileage allowance, buyout price, lease length, and some dealer fees. The selling price is particularly important as it directly affects your monthly payment. Having good credit can help when it comes to these negotiations.

Fixed terms of a lease include the residual value, taxes and fees, disposition fees, purchase option fees, acquisition fees, and registration costs. For better negotiating leverage, shop at month-end or quarter-end when dealers are working to meet sales targets. Research competing offers and be ready to walk away if necessary.

Understanding Warranty and Maintenance Options

Warranty coverage for leased cars will depend on the vehicle’s age and remaining factory protection. Standard warranty coverage usually lasts for three years or 36,000 miles, while engine and transmission warranties are typically longer — about five years or 60,000 miles. Therefore, cars that are 2 to 3 years old usually retain a reasonable amount of original warranty coverage during the lease.

Extended warranties cost extra, so it’s important to weigh their value against any existing coverage. Generally, you’ll be responsible for handling routine maintenance unless the lease states otherwise. Stick to the manufacturer’s maintenance schedules to avoid penalties and keep the warranty valid. Make sure to save all service records for potential claims or when returning the vehicle.

Consider purchasing gap insurance, which covers any shortfalls if your car is totaled and the insurance payout doesn’t cover what you owe. Some lease companies include this coverage while others don’t.

Considering Additional Costs and Add-ons

Leasing a used car includes costs beyond the monthly payments. Upfront expenses typically include a security deposit (usually one month’s payment, refundable if returned undamaged), the first month’s payment, and an acquisition fee. Lease acquisition fees typically range from $300 to $1,000, depending on the manufacturer.

Ongoing expenses include insurance, maintenance, and excess mileage charges, while lease-end costs may include disposition fees, excessive wear charges, and early termination penalties. Plan for these potential costs to avoid nasty surprises and so that you fully understand the total expenses involved when comparing options.

Explore Your Used Car Leasing Options Today

Used car leasing offers lower monthly payments, access to newer vehicles under warranty, and the chance to drive a nicer car than you might afford to buy. You’ll also face less depreciation risk and enjoy predictable monthly bills.

Ready to check out your used car leasing options in Westchester County? Contact us at Bill Volz Westchester or stop by to see our used inventory and learn about leasing programs that fit your needs and budget. The team in our financing center can walk you through the whole process and help find the right option for your lifestyle.

Image Credit: Dealer Consulting Couple about Car Lease by Antoni Shkraba, is licensed with Pexels License

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