Should You Buy a Previously Leased Vehicle? Pros and Cons of Buying an Off-Lease Car

Buying a previously leased vehicle, also known as an off-lease car, can be a great way to save money when shopping for a new ride. A car that is a few years old may cost much less than a brand-new one simply because it has gone through depreciation.

Most used vehicles on the market are usually 2-3 years old and probably from former leases. After the lease period is over, they are returned to the dealership lots, and the dealer sells the cars as pre-owned products.

However, is buying a previously owned vehicle a great idea, or should you remove off-lease cars from your search? Read on to learn more about the benefits and drawbacks of purchasing an off-lease vehicle.

Pros of buying a previously leased car

If you are in the market for a used car, purchasing a previously leased vehicle comes with several advantages. Of course, you can buy a used luxury car from a dealership or private party. However, the best thing is to look out for a dealership that implements measures to ensure you get the best value for your money.

Buying a previously owned vehicle can bring more bang for your buck. Furthermore, you can rest assured that your car has been checked for quality and safety. Here are a few advantages of buying a previously owned car.

Reduced upfront costs

Purchasing a previously owned vehicle can provide buyers on a tight budget with a cost-effective option by reducing upfront costs. When leasing a vehicle, the lessee only pays for the car depreciation during the lease period instead of the total purchase price. That means the vehicle can be sold as a used car at a lower price than a brand-new one when returned to the dealership. This reduced upfront cost may be highly appealing to buyers looking to save money.

Buying a previously owned car can also avoid the initial depreciation that happens when a new vehicle is driven off the lot. Since the car has already endured its highest depreciation period, this can result in significant savings. Furthermore, you may get the opportunity to buy a high-end or more luxurious car than you would typically be able to afford if purchasing a new one.

Low mileage

Leasing a vehicle comes with a lot of restrictions, including a yearly mileage limit. Most leasing contracts have annual mileage limits of 10,000 to 15,000 miles. If you exceed these mileage limits, you could be charged up to 30% per extra mile at the end of the lease.

Since most drivers want to avoid paying additional costs, they adhere to the specified limit. That means your off-lease car will likely have low mileage, which may allow you to drive your newly owned vehicle for a long time.

Good car condition

Most lease agreements require the vehicle returned to the dealership in excellent condition. This means the lessee will likely take good care of the car, and it will have an impeccable maintenance record.

The lease agreement usually specifies what is expected when it comes to vehicle upkeep. This includes routine servicing, keeping the car clean, oil changes, regular inspections, safe driving, and other maintenance requirements.

More time with the manufacturer's warranty

The car might still be covered by one of the manufacturer's warranty by the time the lease ends. Generally, the warranty expires when a vehicle hits a three-year mark or runs up to 36,000 miles. That means if a used car was leased for less than three years, it might come with a manufacturer's warranty. However, this isn't always the case, so it's crucial to talk to the dealership to find out whether the warranty is still valid.

Lower monthly payments

Financing a used car allows you to spread out the cost over monthly payments, making it more affordable and manageable within your budget. When you opt for a used car loan, you can save hundreds or thousands of dollars while still driving a quality and reliable car.

However, when considering a previously owned car, be sure to do thorough research and compare different financing options. Lower monthly payments might be attractive, but you should also consider other factors like interest rates, loan terms, and the total cost of the loan.

Cons of buying a previously owned car

Buying a previously leased car comes with many benefits, but there are potential downsides to owning a previously leased car. Here are a few cons of purchasing an off-lease car.

Fewer customization options

One potential drawback of buying a previously leased vehicle is fewer personalization features. While this might be fine for most buyers, it might have a significant impact on your overall driving experience.

Previously leased vehicles often come with standard features that might not align with your unique preferences. For instance, you may have to compromise on certain aspects like interior upholstery or audio system. Previously owned cars also offer limited customization options, unlike buying a new car, where you can choose from a wide range of options and customize the vehicle to your liking.

More wear and tear

While previously leased cars are often in good condition due to strict dealership criteria, used cars typically have some wear and tear. Car wear and tear is unavoidable and can occur due to the leased car vehicle ferrying the owner on a daily basis.

Due to the hard work, distance covered, and moving parts, things degrade over time. That means you might have to spend money to get new brake pads, tires, or rotors.

The remaining manufacturer warranty won't cover these worn-out items, and any replacements required will be on you. Consider budgeting for an independent mechanic to inspect the car before you buy to avoid high repair and replacement costs.

How to buy a quality off-lease car

Before buying an off-lease car, get Carfax's full vehicle history report. This report contains rich information about the car and will give you insight into who owned it, the actual mileage, and if the vehicle was involved in any accidents. However, keep in mind that accidents not reported to the police or insurance company won't be displayed on the report.

The easiest way to get a high-quality ride is to buy a Certified Pre-Owned (CPO) off-lease car. This is a gently used and low-mileage car that comes with an automaker bundle of add-ons, such as the manufacturer's warranty. When you get a CPO-labeled car, you can rest assured that your vehicle has passed quality and safety inspections and that any issues have been fixed.

Bottom line

Buying a car that has been returned after a lease can be a good way to get a relatively new and slightly used vehicle. It's an attractive option for budget-conscious buyers looking to upgrade their ride at a lower price since the lessee already paid the initial new vehicle depreciation.

However, like any other pre-owned purchase, buying a previously leased car comes with inherently more risks than when you opt to buy a new vehicle. Therefore, ensure the car is thoroughly inspected by a professional mechanic before buying it, especially if you are buying it from a private seller online. You should also shop around for the best deal on a vehicle and ensure it meets all your needs.