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  • Writer's pictureJeff Guymon

Can You Lease a Used Car and How To Do It

Vehicle ownership costs are increasing faster than ever before. J.D. Power estimates that people pay on average $34,000 for a new car. The average price is up by $1,300 compared to the previous year, i.e. it increased by 4% year-over-year.

Furthermore, average monthly payments just hit an all-time high of $550 per month with a 5% increase compared to the previous year’s report. With rising new car prices and monthly payments, potential vehicle owners turn to buying a used car or even leasing a new one.

A hidden secret of the automotive industry is that you may even be able to combine these two great avenues by leasing a used car! We will address the following frequently asked questions about leasing a used car.

Table of Contents

  1. Can you lease a Used Car?

  2. If so - who offers Used Car Leasing?

  3. How do I get a Good Deal on a Used Car Lease?

  4. Can I get a used-car lease if I have bad credit?

  5. Should you lease a used car?


Leasing a used car can save you time and money if done properly and we want to help you save! To ease your mind, this article will delve into the pros/cons, tips, and advice of leasing a used car.

Can you lease a Used Car?

As previously revealed above, yes; you can shave anywhere from $45-$120 off your monthly car payment by leasing a used car. A used car from the dealership is available for lease when it is a CPO, or certified pre-owned vehicle up to 4 years old with less than 48,000 miles on the odometer.

When calculating the lease on the used vehicle, the lender will determine what the car is worth when you begin the lease and also how much it is predicted to be worth at the end of your lease. Your estimated monthly payments on your leased used car can be found by subtracting the vehicle’s valuation at the time your lease ends from the valuation of when you start the lease and dividing this middle portion by 12 for each month’s payment.

Think of leasing a car as borrowing it from the dealer. Your monthly used car lease payment is like a subscription charge for being able to use it. Leasing a vehicle allows the customer to trade cheaper monthly payments for equity. Used car leases are similar to regular leases such as the fact that the lender plays a big role in determining the valuation of the vehicle at both the start and end of the lease and, as residual values for vehicles and the rate that they decline varies, each valuation will vary accordingly.

The lender also determines the vehicle’s money factor. The money factor is similar to a used car loan’s interest rate, except that it pertains to used car leases. The money factor does tend to be higher on used cars compared to new cars just like a used car loan's interest rate tends to be higher than a new car auto loan.

However, the reason that used car leases often end up saving you more than a new car lease is due to the low sales price and lower rate of depreciation (as most of a car’s depreciation occurs when it is brand new). When the high money factor is combined with the low sales price and low rate of depreciation, the result is often a lower monthly payment.

How do I lease a Used Car?

As shown, leasing a used car can save you money every month and even help you afford the vehicle of your dreams (the used version, of course). Now, use these simple steps as a guide on exactly how to get this used car lease.

Call the lender

You should contact the lender of a car that you have your eye on to make sure that it is available for lease. You need to ask the lender if it is a qualified pre-owned vehicle that offers leases. If it is, you can move on with the used car leasing process. Find the lender of a specific car by searching “(The Automaker) Finance Phone Number.”

Find your Dream Used Car

You can find the right used car by searching for certified pre-owned vehicles online. When scrolling through the many used cars that flood the internet, make sure to be flexible when it comes to color or added options. It will make the used-car buying process a bit easier.

Do Your Research

Get the best deal on your used car lease by having something to compare it to. You should find both the new and 4-5 years used version of the model of the car you are looking for and determine how much a lease would be on both. Don’t be afraid to ask for a better deal while at the dealership. It is easier to shop as an educated consumer when you have a point of comparison in hand.

Find a Used Car Lease

You can call car dealers to see if your preferred vehicle is available for a used car lease or you can explore online options (see “Who Offers Used Car Leasing” for online). When it comes to dealerships, used car leases are currently pretty rare, so don’t be afraid to ask for confirmation from a higher-up manager if you are initially told you cannot lease a particular used vehicle.

Make Sure You Get a Good Deal on the Lease Agreement

Once you find a dealer that will lease you a CPO car, ask for a price quote. Next, compare the total down payment amount and amount of monthly payments (including taxes and fees) to your other quotes.

Warranty and Insurance

Once you find the right deal, you need to make sure to ask about a bumper to bumper warranty to protect your car as well as insurance for your lease. Car insurance is required by just about every single state and it is against the law to drive without it.

The Limits of Liability vary from state to state, however, it is common for states to require as little as $25,000/$50,000 limits of liability. You must not only make sure you are adhering to the state’s required limits of liability insurance, but also the leasing company’s requirements. These are often higher than the state’s. For example, you might find a leasing company requiring limits of $100,000/$300,000.

Who Offers Used Car Leasing?

As previously discussed, the traditional way to obtain a used car lease is to go through a dealer, however, there are currently many other options such as online lease swaps. An online lease swap is where you can explore current leases in order to take over someone else’s lease.

Taking over a used car lease can help you afford a car you wouldn’t normally be able to. It also shortens the length of time of the lease as you would be taking it over somewhere in the middle. It is especially easy to get a great deal on an online lease swap because, oftentimes, these sellers are desperate for someone to take over their lease. You should argue for a better deal than they initially proposed.

A good tip would be to ask the seller to cover the first or even the first and second-month payments of the lease. There are some highly recommended online lease swap sites linked below.

How do I get a Good Deal on a Used Car Lease?

In order to get the best deal on a used car lease contract, you have to understand that the car buying process requires negotiating on behalf of the buyer and seller. You can bring up factors such as how old the used car is and if it would potentially require lots of repairs and have high maintenance costs. Another factor to use when negotiating for the best lease deal is to keep in mind that leasing any car means that you gain no equity in the vehicle itself.

Be aware of fees and interest! Even though a used car might offer significantly lower monthly payments, there are a bunch of potential fees to be aware of. Potential fees (these vary based on the dealer, state and vehicle) to pay attention to include( these vary based on the dealer, state and vehicle):

  • Acquisition charges

  • Dealer-prep fees

  • Disposition fees

  • Security deposit

The money factor that was previously mentioned is, indeed, higher than an interest rate on a new car. For example, according to Experian in 2019, the 10.07% interest for used cars overshadowed the 6.27% interest rate for new cars. The best advice we can give when trying to get the best deal on a used car lease is to

  1. Have price quote comparisons

  2. Be aware of potential risks, fees, and interest

  3. Don't be afraid to use these to your advantage when negotiating!

What are the Pros of Leasing a Used Car?

There are many upsides to leasing a used car in contrast to a new car. Some ways that leasing used can save you money are listed below:

Lower monthly payment

Used vehicles are worth less than brand new ones, contributing to a significantly lower selling price. This low purchase price accounts for the steep new car depreciation curve. With all elements combined, the CPO vehicle will have lower monthly payments than leasing a new car.

Potential Buyout

When you lease any car, you are simply borrowing it until the lease ends. Once the lease is up, you have the option of trading your vehicle in or buying the vehicle out of the lease. Used cars are better candidates for a lease buyout than new vehicles since they are worth less and the residual value of the car will be lower.

Extended Warranty

A CPO vehicle will most likely have longer mileage limits than a newly purchased car. A typical CPO powertrain warranty will cover up to 100,000 miles. This is another reason that a CPO is a good candidate for buyout once the lease is concluded.

Lower Auto Insurance Costs

Since used cars are often worth less than new ones, your insurance costs may save you even more money.

Get the most “bang for your buck”

When leasing a used car, you can afford a more expensive car than if you were to lease the same model new. Good CPOs to lease are luxury cars that hold their value.

Can I lease a used car if I have bad credit?

Car dealerships and leasing companies will run credit checks on all customers before signing a lease. They run your credit score in order to identify how much of a risk you pose for their money. Their goal is to get their money back (plus a little extra with interest), however, this will not happen if you don’t pay it. If you have a low credit score, this signals to the dealer and lender that you have a bad track record for making payments on time.

Don’t worry; this does not mean they won’t grant you a lease. In order to compensate for potential risk, they will likely raise your interest rate or money factor. There are options available when trying to obtain a lease off of bad credit such as:

  • Having a cosigner with good credit.This means that if you do not pay your monthly lease payments, the co-signer will be held responsible for the lease terms. It is another way a lender can make sure they will get a return on their lease.

  • You can make a down payment or security deposit that you can get back at the end of your lease.

If you’re interested in saving money per month by leasing a used vehicle, you can also save money on your monthly payment by refinancing. WithClutch offers auto refinance options without impacting your credit score, and with no obligation or hidden fees.

Save your money and time by refinancing from the comfort of your home in less than 20 seconds. Follow these simple steps to find out how you can lower your car payment of your Toyota, Audi, Honda, Camry SUV, and more using WithClutch!

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