Yes, you can lease a used car. No, not every dealer offers used-car leasing. Here’s the rundown of leasing a used vehicle.
Lower Payments and Buyout
Because a lease charges you just for the estimated monthly depreciation of the vehicle (plus interest and other fees), your monthly payments are less than if you use a loan to pay for the vehicle. In addition, if you buy out the lease at the end, that price will also be considerably lower than if you purchased the vehicle at full price instead of leasing it.
Potential for Higher Maintenance Costs
Vehicles require more maintenance over time. That’s a given. But because your leased car is used, be prepared for higher maintenance costs. When you lease a car, the lessor (the company—usually not the dealership—you are leasing from) owns it; you don’t. So the lessor of course wants you to take good care of the vehicle. Whereas you might push off repairs on your own vehicle, you’ll likely incur hefty fines if you do so with a leased vehicle.
This may be one time where talking to the dealership about purchasing bumper-to-bumper warranty, ideally for the duration of the lease, makes sense. However, read the fine print to make sure you understand what the warranty will and won’t cover.
Before heading to the dealership, research your desired vehicle’s reliability. Several online sources can help you paint a picture of how difficult your car may become to maintain. This research, though, cannot guarantee you lower maintenance costs. Just beware of that caveat.
Certified Pre-Owned Vehicles
Often called “CPO” vehicles, they’re sold by manufacturer dealerships (e.g., your local GM, Honda, Kia, etc.). The dealership must put these vehicles through a stringent inspection before labeling them certified, and dealerships may have their own certification process that goes above that. These processes make this category of used cars an attractive option for leasing.
Leasing with Bad Credit
If you have bad credit, chances are you may not be able to lease a car. Credit bureau Experian says lenders typically want a lessee (that’s you) to have a FICO credit score of at least 700 before they’ll lease a car to you. Leasing is attractive because of the low monthly payments. However, if your credit history prevents you from securing a lease, you may need to take out a subprime loan.
Do Your Homework
As with any vehicle purchase, research your options before heading to the dealership. However, when considering leasing a used vehicle, also double-check that the dealership you’d like to purchase from offers that possibility. Check your credit scores before you go, know your budget, and you’ll be off to a good start as you investigate leasing a used vehicle.