Used car leasing is gaining popularity as people realize they can lease a newer car for less than they could purchase a older used car. In fact, used car leasing is one of the last high growth areas of automobile financing.
Purchasing even a used car often requires a large down payment and usually comes with large monthly payments. Leasing a used car offers low monthly payments, a small down payment and the chance to drive a car you'd have difficulty purchasing, even used. Use this list of frequently asked questions to familiarize yourself with used car leasing. If you have questions about used car leasing not answered in the FAQ, contact us at myAutoloan.com.
It depends on your lease, the car and why you are choosing to lease a car. Most people who lease do so because they want to drive a better car than they could afford to purchase. If this is your reason for leasing, then a used car lease could be a good option for you. As long as the lease has reasonable terms and the car is in good condition there is no reason not to take advantage of the benefits of leasing.
The benefits of leasing a used car are similar to the benefits of leasing a new car. The terms, negotiation process and contractual obligations are the same. Leasing a used car is based on the same concepts as leasing a new car. You are paying only for the time you use the car and you are not responsible for the car when the lease ends. Used car leasing also allows you to drive a car with low monthly payments for little or no down payment.
Many leased used cars come with warranties. Check the warranty carefully to determine if the warranty is a true extended coverage warranty or just the remainder of the car's original warranty. When considering a used car lease, get a list of what's covered and what isn't in writing from the leasing company. It's unadvisable to lease a used car without a warranty.
Car warranties usually only cover major mechanical breakdowns. Repairs not covered by a warranty are your responsibility. It's important to research any used car you lease. Obtain the car's vin number and try to trace the cars history through CarFax or a similar company. Have the car inspected by an independent third party to insure the car is in good repair. MyAutoloan.com has a good tool for researching a used car's history through it's vin number.
Yes. Do not deal with any leasing company who will not negotiate the price of a used car for lease. Research the market value of the car and negotiate with the dealer for the best price before leasing.
Check for a warranty on the used car. Understand the market value of the used car before you negotiate your lease. Understand the following leasing terms and how they will affect your lease: money factor, residual value, up-front fees, lease terms and lease-end fees. Thoroughly read the leasing contract and understand your contractual obligations.
No. The selling price of a car is important since it helps determine how much you will pay for your lease. The lower the cost of the car the lower the payments. Used car lease payments are determined by the difference between the selling price of the car and the car's expected residual value at the end of the lease. You should negotiate the selling price for a used car lease just as you would if you were purchasing a used car.
Absolutely. Some cars depreciate faster than others. It's important to choose a car that depreciates slowly when considering a used car lease. Cars with slow depreciation get better leasing rates and terms. When depreciation is low, the used car will have a higher residual value which makes monthly payments lower.