Car lease payments can be pricey, especially if you're looking at a high-end model with all the bells and whistles. To save money, you might think about leasing a used car instead, which could have a lower monthly payment.
More and more dealerships are offering used car leases on vehicles that have recently come off an initial three-year lease. These vehicles are often labeled as "Certified Pre-owned" (CPO).
Before you decide to lease a used car, there are a few things you should consider. Here's what you need to know about getting a lease on a used car, including how it works and the pros and cons.
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What Are Certified Pre-owned Cars?
You can think of a Certified Pre-owned Car (CPO) as a vehicle that has been lightly used and inspected closely by the dealership or manufacturer. These vehicles are often trade-ins or cars that have recently come off a lease, which means they generally have low miles and are in good condition.
When the dealer receives the car, they do a multi-point inspection and make repairs inside and out to bring the car back to the automaker's standards. In addition, many CPO cars come with a manufacturer's warranty. Not all lightly used cars can be CPO, however. Each car company has different criteria for CPO cars, including age, mileage, and amount of wear and tear.
Where to Get a Used Car Lease
Getting a used car lease is more difficult than getting a standard lease. Not all dealerships offer used car leases, and you will probably have a smaller selection of cars to choose from.
If you can find a dealership that leases used cars, however, it could help you save a significant amount of money. Here are a few ways to get a CPO car lease.
Franchised Dealers
Franchised dealers (dealers that only sell one car brand) are the only sellers that can legitimately offer CPO vehicles for lease. That's because CPO standards are unique to each car manufacturer.
If you're looking for a used car lease, this should be your first stop. However, with the current inventory shortage in the car market, keep in mind that finding a used car lease could be more difficult.
Take Over Another Lease
Another way to lease a used car is to take over an existing lease. You can use an online matching service to find someone who wants to get out of their lease. You'll still need to get approved by the leasing company, and you'll likely have to pay a transfer fee to close on a used car lease. But unlike a traditional car lease, you might be able to avoid making a big down payment.
Pros of Leasing a Used Car
Leasing a used car can help you save money, but it's not the best option for everyone. Below are a few reasons why you should consider a used car lease:
Lower Monthly Payment
If you want a lower monthly payment than you'd get with a new car lease or a new car purchase, leasing a used car could be a good idea.
Access to a Nicer, Newer Car
When you lease a car vs. buy a new car, you can often afford to get into a nicer and newer car with a smaller monthly budget.
Manufacturer's Warranty
Many CPO cars come with a manufacturer's warranty. While each company offers its own warranty coverage, most CPO cars have a limited warranty that lasts for up to one year or 12,000 miles, whichever comes first.
Cons of Leasing a Used Car
Before you decide to lease a CPO car, it's important to consider the downsides. Below are some cons of leasing a used vehicle.
Wear and Tear
When you lease a CPO car, the vehicle will likely have some degree of wear and tear. Depending on the model year, the car might also lack the latest technology and advanced safety features.
Maintenance Costs
Not every used car lease warranty covers maintenance costs, and if you don't keep up with the manufacturer's recommended service plan, you could end up owing your leasing company more money than you anticipated. Plus, you might have to pay out of pocket for routine repairs like brake pads and new tires.
Limited inventory
Finding a used car that's available to lease can be challenging. Unfortunately, you won't see many dealerships advertising this option, as it's not always in their best interest to offer this type of deal. You'll probably need to call around to your local dealerships to see what deals are available.
More risks
Leasing can be riskier than buying a car outright (or financing a car purchase with a loan). Leasing companies charge fees for lots of things, like going over the mileage and returning the car with excess wear and tear.
Depending on your driving habits and how well you treat your vehicles, you might be better off buying a used car instead.
Finance & Insurance Editor
Elizabeth Rivelli is a freelance writer with more than three years of experience covering personal finance and insurance. She has extensive knowledge of various insurance lines, including car insurance and property insurance. Her byline has appeared in dozens of online finance publications, like The Balance, Investopedia, Reviews.com, Forbes, and Bankrate.
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Can You Lease a Used Car? Learn the Ins and Outs of this Misunderstood Process - Car and Driver
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