Can You Lease A Used Car? Full Step-by-Step Guide

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Maybe you’ve had your eyes on a certain third-generation Honda Passport but, after concluding your research, you realized your savings isn’t close to the worth of the car, don’t be discourage rather lease the vehicle.

In this article, you will learn how used-vehicle leasing works as well as the step-by-step procedures on how you can lease a used car.

Unlike Car financing, a vehicle lease allows you to drive a vehicle from a dealership for an agreed-upon period of time, and pay for its usage rather than for the full purchase price of the vehicle.

Leasing is not only for new cars, you can lease used cars too. Read on to learn more, you may find leasing a used car appealing.

How Does Used-Car Leasing Work?

Just like new leases, a used car’s residual value is determined by the lender. The payment of the car is determined by the difference between the vehicle’s sales price and its residual value. The residual value varies because not all vehicles depreciate at the same rate.

The lender writes the lease and assigns the deal a money factor, which is the interest rate. The money factor is usually higher than in a new-car lease. Nevertheless, the higher money factor is coupled with a lower sales price and a lower rate of depreciation, usually resulting in a lower overall payment. At the end of the lease, shoppers are able to buy out the used car just as they can with new vehicles.

How To Lease a Used Car – Best Tips

#1. Contact the Dealer

Knowing where to look for a vehicle lease is the first step to getting g the best deal lease on used car. Once you choose your preferred car model, next is to find out if a lease is available. You can place a call to the captive lender of that brand and asking if it offers leases on used pre-owned vehicles.

#2. Negotiate a Better Deal

Before you approach a dealer for a car, do a little research. You can check for the model and make of the vehicle you want to lease on websites like Kelley Blue Book. This will help you get an estimated value of the vehicle.

#3. Get a Warranty

When signing a deal on a pre-owned car lease, request a warranty from the dealership to avoid any wear-and-tear charges at the end of your lease.

In the case where you can’t lease a certified pre-owned car, buy a service contract to cover certain unexpected expenses.

Keep in mind that not all service contracts are not created equal. Make sure you Inquire about the warranty so you know exactly what you are signing up for when leasing a vehicle.

#4. Get a Price Quote

Once you secure the best dealership that is set up to offer you a pre-owned car lease, ask for a price quote. Use the Edmunds appraisal calculator to get the dealer’s retail CPO value, and negotiate for the best price. Finalize the down payment and sum up the monthly payment, including taxes and fees.

#5. Insure Used-Car Lease

Every leased car requires comprehensive, collision coverage, and Gap Insurance. The comprehensive coverage takes care of physical damage protection. It protects against hitting an animal, storm damage, fire, theft, vandalism, windshield damage, and more.

Collision Coverage covers hitting inanimate objects like a guard rail, hitting another vehicle. Leasing companies often require collision coverage to make sure their collateral is fully repaired after an accident.

GAP insurance works alongside collision and comprehensive coverage insurance. Most vehicles depreciate in the first year or two, so, in other not to owe more on the car than its true depreciated value at the time of the collision. GAP insurance will prevent you from having to pay out-of-pocket for the difference in what they owe and the depreciated value.

Accident In A Leased Car

If a lease vehicle gets involved in an accident and is wrecked, your lease will end before its term. However, if it’s minor damage, your insurance covers the repairs and turn in your leased vehicle when the lease term is over.

Pros And Cons of Used Car Lease

Pros

  • Low down payment
  • Usually covered by a longer warranty
  • Great repair coverage
  • No upfront sales tax fees

Cons

  • Car is aging and may develop faults
  • Excess mileage penalties
  • High maintenance cost
  • Early lease termination fees
  • May not have the latest tech car features

Conclusion

Leasing a used car could save you money on your monthly payments. Follow our tips and find a used-car lease that fits your needs and budget. You should also learn how to break a lease.

Reference

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