Can You Lease a Used Car? Car Leasing Explained
Living in some places means you must have a car to run errands. Many house listings include a Walk Score that tells you how necessary it is for a particular property. However, according to Kelley Blue Book, buying a vehicle isn’t cheap, with the average increasing to $47,077 in 2021. That’s where leasing comes into the picture.
Leasing offers a more affordable way to get a vehicle. You can expect to pay about $506 a month versus the $617 for a new car loan. However, you can make it an even more economical purchase if you opt for a used vehicle instead. Yes, you don’t have to settle for a new one. The challenge is finding one.
According to National Automobile Dealers Association (NADA), new vehicles accounted for 26.2% of sales from leased cars in Q2 2021. Used vehicles made up only 7.7%. New cars don’t stay on the lot long, either, with a record low of 17 days in 2021. You’re also more likely to get any ride if you have a decent credit rating.
Pros and Cons of Leasing a Vehicle
Several compelling reasons might have you considering leasing a car. We talked about it being cheaper. That’s because you’re only going to have the vehicle for a limited amount of time. The money you pay is the value it’s expected to lose over that period. You’ll likely have a lower down payment, too.
The best thing about leasing a car every few years is taking advantage of new technology and safety features. That’s a good thing if something turns out to be a bust because you won’t have the hassle of unloading it. Besides, who wouldn’t like driving a new ride with the latest bells and whistles? It’s an excellent option if you want to try out different models or aren’t sure what the future holds.
Often, you’ll have a mileage limit if you opt for a new vehicle. Used cars don’t always have that same commitment. Bear in mind that it’s not yours. You’ll have to return it in decent shape to avoid extra fees. Remember that the dealership is in it for the money. Their goal is to get the highest ROI on any vehicle on their lot.
How Leasing Works
Think about what you want out of your ride and how much you think you’ll drive it. That can make a significant difference when it comes to fuel efficiency. The best way to take advantage of the benefits of leasing a used vehicle is to get a certified pre-owned (CPO) car. They will have lower mileage, usually under 48,000. They are also newer at less than four years old.
Dealerships must put them through an inspection to ensure the vehicles are in good shape. The catch is that there are a limited number of makes from which to choose. They include popular ones, such as Toyota, Honda, and even Porsche. Your lease agreement will provide details of the things you must do. We strongly urge you to read the fine print to avoid any nasty surprises.
You can save $50 or more a month going with a used vehicle. That’s why it pays to shop around to get the best deal. Most contracts involve certain costs that you should be aware of upfront. Of course, there’s your down payment and your monthly cost. There’s also what is known in the trade as the money factor. Essentially, it’s the interest on the lease because nothing comes without a cost.
Any purchase or lease involves admin expenses. You’ll pay your share with the acquisition fee. It can run hundreds of dollars, which is why we recommend reading the details carefully. You’ll also have to shell out some cash to return the vehicle. That’s the dealership’s way of covering their detailing costs. It pays to return your car in immaculate condition to avoid wear-and-tear charges.
Another expense you may see is a charge per mile if you go over a set mileage figure. You’re more likely to encounter it with a new vehicle. However, we recommend verifying whether you’ll have to pay it before signing the dotted line. It’s another expense that can add up to 10–25 cents per mile.
Leasing a car is an excellent way to save money while enjoying the pleasure of driving a new ride. Opting for a used vehicle is an even smarter choice with significant savings on tap. The best advice we can give you is to shop around and research. Learn what your obligations are before you commit. The right car at an affordable price is a wise investment.
- See Also: 10 Car Loan Statistics and Facts
- See Also: How Many People Lease Cars in the US (2022 Update)
- See Also: What Is APR on a Car? Car Loan Terms Explained
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