What Kind of Price to Lease a Used Car?
Leasing a used car is the right choice for you if you are looking for a lower monthly payment on your car. Also, it is good for you when you don’t want to own a car in the long run. By leasing a used car, you can enjoy the facilities of a near-new car at a very low price.
Leasing a car can save a lot of your money. But leasing a used car is not that common. In the current market, most leasing companies lease new cars, but very few provide the facility of leasing a used car. There is not that much advertisement on leasing used cars either. So it can be quite troublesome to find dealers who actually lease used cars.
Is It Possible to Lease a Used Car?
Yes, it is possible to lease a used car. Most used car leasing companies provide Certified pre-owned (CPO) cars. So you won’t have to worry about the condition of the car. But before leasing the car, you should research some things such as which leasing companies lease used cars and offer the best lease deals, what brand’s car you want to lease, how the used car lease agreement and the monthly payments work, whether they require single pay lease, learn what is the process if you want to trade out of the lease early, etc. Before confirming the leasing contracts, very carefully read everything and know what is their requirements since different leasing companies have different requirements.
How Used Car Lease Work?
To lease a used car, you will have to go through step-by-step phases. Below are the steps explained-
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Firstly, Find a Dealer
The first step toward leasing a used car is to find a dealership company that actually offers it. You can go to your local dealers or any car financing companies to find out if they lease used cars.
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Negotiate to Get the Best Deal
After finding a dealer, the next step is to negotiate with them. The goal is to finalize the lowest cap cost. At first, start the negotiation with the price of the vehicle, then the down payment, mileage limits, trade-in values, and other purchase options. You may have to pay license fees, sales tax, and title fees. Some dealers require dealer fees, acquisition fees, and other fees added to the lease. Some companies include an interest rate, state sales tax, a security deposit, and an acquisition fee with the monthly payment. So while negotiating, check various lease options to find the best lease deal.
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Decide on the Warranty of the Lease
If you lease a Certified Pre-owned car, then the warranty is already added by its manufacturer. But the leasing company might offer extended warranties. An extended warranty costs around $1,200-$2,500.
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Look for Other Add-ons
Some leasing companies may require you to buy guaranteed asset protection insurance or also known as GAP insurance which covers the amount if the car is totaled in an accident or was stolen. The GAP amount is the difference between the amount the auto insurance company pays and the total cost of the lease. You can definitely consider this add-on for the car lease.
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Know The Limitations and obligations
Make sure you understand and know all the obligations and limitations before signing the leasing contract. Carefully check if they require any early termination fees or extra mileage fees and what is their excess wear-and-tear charges.
What Costs to Expect while Leasing a Car?
To get the best lease deal, You will need to know the leased vehicles’ starting value and the residual value. The difference between these two values is the principal cost of your lease contract. You can take a single-payment car lease or can choose a monthly down payment on the lease. A single-payment lease is a one-pay lease where you pay the entire lease upfront. But you may have to pay sales tax on a single-pay lease. This is where a car lease is different than a car loan. In a car loan, you pay cash because you own the car. But in a car lease, you pay to use the car for a certain period. Also, car leases require a lower money factor than auto loans.
Pros and Cons of Used Car Leasing
Leasing used cars is best for you when you are looking for low monthly payments for a car. Used car leasing requires fewer lease payments than a new car lease. Apart from these, there are more pros and cons associated with leasing cars. These are-
The Pros
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Afford a Luxury Car Within Reach
By leasing a luxury used car, you will be able to experience the ecstasy of a luxury car without even owning one. When it comes to used car leasing, you should choose cars that retain their value, and luxury cars surely have that.
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Easily Trade It for Another Vehicle
When you own a car and want to change it, you will have to go through the hassle of selling it. But if you lease a car, you can just trade it for an upgrade at the end of the lease agreement, which is an easier process.
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You Can Get a Short Lease Term
You can lease a car for a short time period. Or you can even sign up for a lease swap. You can even terminate the lease contract early.
The Cons
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Leasing a Used car is Uncommon
Usually, most car dealership company only offers to lease brand-new cars. So it will be quite hard to find dealers that lease used cars. Also, after the pandemic, due to the global microchip shortage, the inventory is less overall, which means it will be pretty hard to find a good deal even if you find dealers who lease used cars.
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Mileage Limits
The mileage limit is one of the prime drawbacks of leasing a used car. If you are leasing a used car for long commuting, this might not be a good decision for you since most dealers limit the mileage to 12,000 to 15,000 miles per year. And if you go overboard, you will have to pay extra money.
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New Car Lease Vs. Used Car Lease
Leasing a car might cost less than buying one, but in reality, it won’t save much. Another thing is there is not that much difference in cost between leasing a new car and a used one. Generally, a used lease requires a higher rate factor than leasing a new one.
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Maintenance Costs
The maintenance cost of a leased car is as same as owning a car since you have to take care of it. Anything that is not covered by the warranty, such as mechanic visits, and daily oil changes, you will have to pay yourself. Also, you will be responsible for any extreme wear and tear. You are expected to pay extra money for any damage to the car that was caused by you or any accident that happened on the road.
Is There Any Alternative to Leasing a Used Car?
Yes, there are many alternatives. There are surely a lot of pros and cons to leasing a used vehicle, but in case you don’t want to lease a used car, there are also some alternatives to fix your problem. Rather than leasing a used car, you can buy a used car. Used cars cost way less than brand-new cars, so instead of leasing a used car, it is wise to buy that used vehicle. Another alternative is trying lease swaps. Lease swapping is for people who want to end their lease early. You can find them on various lease trading websites such as LeaseTrader.
Final Verdict
Used car leasing is great for you when you don’t want to buy a new car. Also, Used cars require the lowest monthly payments. So leasing a used car can definitely save you a lot of money. But don’t forget that, due to the limited inventory worldwide, it is quite hard to find a dealer who leases used cars; also, it comes with potential maintenance costs.
So whether you lease a used or new car, make sure to do your own research on everything associated with leasing a car, whether it is budget-friendly or not, and ensure that it suits your driving style. Check out our website, Zippy Cash for Cars, to find great deals on cars!
