You’re familiar to the idea of leasing a new car, where the payment is divided into smaller installments over the course of the rental agreement rather than being paid in full. But can you lease a used car? The good news is that you can, and it might be a choice that is worth thinking about.
You might say that renting a used vehicle offers you the best of both worlds. Your monthly payments are lower than if you had leased a brand-new vehicle, but you still get a more modern vehicle with superior technology and lower operating costs than if you had purchased an older vehicle outright.
But how does a car leasing operate specifically? Which are the benefits and which are the drawbacks? Find out by reading on our guide.
Can you lease a used car? Is renting a used car preferable than owning one?
It’s up to you to decide whether leasing a used car is preferable to buying in some ways.
It makes sense if you have the money to buy a relatively new car outright. You don’t have to worry about making monthly payments, and because you won’t be paying interest, it might even be less expensive.
Everything is great if you want to spend the money up front, but what if you don’t? Leasing a used car would be a wise decision in that case. To own the used car you’ve been eyeing up in the showroom, you don’t need to make a ton of cash. It might even imply that you can purchase the dream car you had previously written off as being out of reach.
How does leasing a used car operate?
Predictably, used car leasing functions in the same way as leasing a new car, with the surprising exception that the vehicle in question is used.
You make an initial payment, then smaller monthly installments over the course of an agreed-upon term, as opposed to paying everything up front. Typically, this lasts for 24 to 60 months.
There is no option to purchase the car entirely with a final balloon payment, unlike with a PCP finance plan. Instead, you will have a defined annual mileage limit with a by-the-mile penalty charge if you go over it. After paying your dues, you return the car and go on to the next.
Which car can you lease the oldest?
Although there is no hard and fast rule, it’s likely that you will lease a used car from a franchised dealer, meaning that it will likely be no older than three years.
Many producers additionally offer breakdown and maintenance coverage (a payment towards your first MoT if your car needs work to pass).
Is purchasing a used car more affordable than leasing one?
Most likely not. When you lease a car, you must pay interest that would not be necessary if you had paid cash for the used car entirely. Additionally, you lose out on the savings that come with purchasing a car privately.
There may, however, be some exceptions. If you buy a car at the age of six months and sell it at the age of twelve months, it’s likely that the cost of depreciation will be far more than any interest savings.
What are the benefits of leasing a used car?
Leasing a used car has several very low monthly payments instead of having to pay the entire amount up front, which is its main benefit.
That might be a wise course of action. Instead of purchasing a vehicle that is on the rickety side, prone to breakdowns, and expensive to tax and fuel, you may get a more newer model that will be more dependable and less expensive to maintain, without having to worry about unforeseen charges. Additionally, it need to be covered by a guarantee, and you might be able to include maintenance charges in the monthly price.
However, because you’re still buying used, you save money over leasing the same car brand new because you’re effectively capitalizing on the huge depreciation that most cars experience in their first few years of use. It could be described as a win-win situation.
What drawbacks are there to renting a used car?
The fact that you’ll never truly be the owner of a used car is one of the main drawbacks of leasing one, which could be bothersome for a number of reasons.
If you purchase a new car through a PCP finance package, you will have the option to make a final balloon payment and become the owner of the car. This is an alluring choice because you will know the car has been well-maintained. It’s less nerve-wracking than purchasing a car whose previous owner you don’t know.
On the other hand, if you purchase an older used car outright, drive it for a few years, and then decide to trade it in for another vehicle, you can part exchange it for your replacement and receive a useful sum of money that you would not otherwise receive.
So, can you lease a used car? The answer is Yes. Leasing a used car is a great option to receive a reasonably priced, well-maintained, and recently-produced vehicle. Many large dealerships have certified pre-owned vehicles available, and it can frequently be more affordable than leasing a new car. Make sure to speak with your neighborhood dealership to learn more about choices for leasing a used car.