Should You Lease a Used Car?

Can you lease a used car? Yes. Should you lease a used car? The short answer is a firm no. While the thought of paying less for a car and not being locked into a long-term contract might be appealing, here are some of the main reasons why leasing a pre-owned car is generally a bad idea.

To start with, most dealerships don’t offer leases on pre-owned vehicles anymore (one of the many casualties of the recession). The dealerships that do offer the service are few and far between, and often the selection of vehicles isn’t all that spectacular.

Pros and Cons

Let’s say you do manage to find the used car of your dreams at a reasonable monthly rate. There must be at least some considerable pros to balance out the cons, right? New cars tend to depreciate in value the most dramatically within the first couple of years of ownership, so by the time it’s available for you to lease second-hand, its overall value has considerably lessened. This is good because your monthly payments should reflect the lower value. On the flip side, this means that the best years of your car’s life are already gone. The chances of your car needing expensive repairs shoots up, and unless your car is still under its original warranty, the one who has to pay for the repairs out of pocket is you. For a car you don’t even own.

That means that in addition to your monthly lease payments, you could also potentially be on the hook for thousands of dollars in repairs over the duration of your lease. And at the end of the contract, you don’t even get to keep the car. Meaning you’ve put money into a car that someone else is just going to wind up owning.

What are some other Cost Efficient Alternatives?

Owning a new car has become much more accessible to the average person over the last few years and is  definitely worth considering. If you’re still absolutely set on leasing, then it’s a much more financially sound decision to lease new even just so you know you’re protected against having to pay for any repairs yourself (it helps that you get the peace of mind of knowing that you’re the only one who’s driven the car before too so there won’t be any unexpected surprises in the vehicle’s history).

If the prices are still putting you off buying or leasing a new car, then you’re better off buying a used car rather than leasing it. In both scenarios, you’d have to pay for any repairs yourself, but at least if it’s your car you’re the one who benefits (rather than the dealership).

Taking Over an Existing Lease

There is another option if you’re absolutely dead set on the idea of leasing a used car – you can take over someone else’s lease. The bright side to this arrangement is that you know who the driver of the car was before (and the history of the car) and the original warranty is still in place. In addition, you’re tied to a much shorter contract (often only a year or 2) and still get to drive a relatively new car.

The main flaws with this arrangement are 1) it can be difficult to find someone who’s trying to break their lease 2) a considerable chunk of the car’s value and ‘newness’ is gone (and the value has depreciated) and 3) at the end of the lease, you’ll be responsible to pay the dealership back for any damage or extra costs incurred (even for the things that happened before you took over the lease).