You’d be surprised at the number of people who prefer leasing over financing or buying a car. Millennials, more than any other age group, prefer leasing a car over buying it. For one, they can change the model of their car every two years or so. And secondly, because leasing a car is cheap, if you find the right deal.
Car manufacturers such as BMW, Audi, and others have car lease programs. At the end of the lease, these used cars turn up at car dealerships. The influx of used cars is benefiting used car dealers, auto auction, and car buyers. This makes it possible to lease or buy a used car at very low costs.
Why lease a used car?
If you’re saving some money, leasing a used car makes perfect financial sense (unless you’re a car enthusiast). Finding a used car lease can be tough, however. Most dealers do not advertise used car leases, but you can find independent used-car dealers online.
According to experts at Edmunds, by leasing a used car, you can save $40 to $125 per month. If you lease a used luxury car, you can save even more. A used car does not depreciate in value as quickly as a new car. A new car depreciates the most in the first couple of years. Hence, a new car lease owner tends to pay more than a used car lease owner. This benefits the lessee. A used car that is less than 4 years old and has less than 48,000 miles is a certified pre-owned vehicle (CPO). CPO vehicles have warranty coverage, so you don’t have to worry about scratches and other damage to the vehicle.
Leasing a used car is like leasing a brand-new car. The monthly payments for the lease are determined based on the residual value and the sale value of the car. The lender of the vehicle also assigns a money factor, which is the interest rate.
Although the interest rate on a used car is higher, the lease payments of a used car are less than that of a new car. So you end up saving money. Used cars can be bought at the end of a lease because they usually have a lower residual value. Since a used car has less worth, you pay a lower insurance cost. Without a doubt, leasing a used car benefits the lessee.
However, leasing a used car is not everyone’s cup of tea. Although a warranty covers the repair of the car, it may not be available for the entire lease period. Moreover, some may not prefer it because a used car requires more maintenance, so the repair costs are high if not covered by the warranty.
How to find the perfect used car for lease?
There are two ways to rent a used car. You can lease a used car from a dealership. Cars that turn up at dealerships are often those that have expired leases. The other method involves taking over an existing lease. There are many websites like Quitalease that facilitates buyers and sellers of a lease. In exchanging a lease, you pay the same monthly amount that the original lessee was paying. However, you don’t pay the initial fees.
Used cars often face unequal depreciating value. So not every used car will be perfect for leasing. This becomes more complicated because not every dealer provides a lease for used cars. This is why finding a lease on a used car is a little painstaking. These are the factors you need to consider.
Value of the car
To get the most out of your used car lease, you need to keep a lookout for cars that maintain good value during the so-called “middle years.” Luxury and sports cars hold great value and are a suitable candidate for a used car lease if it fits your budget. According to a website, luxury car manufacturers provide factory warranty coverage for CPO vehicles. Luxury car manufacturers such as BMW and Mercedes have a CPO leasing program where you can find used cars for lease at affordable prices.
Know your budget
Even before you begin searching for a used car lease, you need to determine your budget for the monthly lease payments. Most used luxury cars such as sedans are available for lease at around $200. You can lease a used SUV for about $250. If you lease a used luxury car, you drive it at the price of an average car.
Obtain the vehicle history
Before you decide to lease a car, you should obtain the vehicle history. This will include details regarding any accidents the vehicle has been in. You can also find out how many owners the car has had. Also, you want to be sure of the car’s condition before you sign the lease papers. Hiring a mechanic to inspect the car can help you in making the right decision.
Find a dealer
As mentioned above, not all dealers provide lease on a used car. So finding one can be tough. Only an authorized dealer can draft the lease on a used car. You can sometimes find lease on used cars through car manufacturers as well. There are many independent car dealers with “buy here pay her” services. However, if you obtain a car lease through them, you will end up paying higher interest rates.
Negotiating a used-car lease
In most cases, you can negotiate the lease on a used car. For this, you need to be aware of the costs involved. The total cost of a lease includes down payment, monthly payments, and other fees. The monthly payments are determined using the residual value, and the interest rate charged. Generally, the residual value of the car, acquisition fees, license tag, and registration fees are not negotiable. However, you can negotiate the documentation fees.
Leasing a used car can help you stay within budget while also enjoying your car. Because if CPO leasing and financing programs, luxury cars are made more affordable for the average buyer. Moreover, when you lease a used car, you have the advantage of a low cost for a buyout.