Used Car Leasing
Used-car leasing has become more popular as the economy worsens. It seems like to provide a cheaper way to drive a car than new-car buying or leasing, or maybe used-car buying. But is it all it seems?
The apparent benefits of used-car leasing are:
* You avoid a brand new car’s rapid first-year depreciation
* Used car prices are lower than new-car prices, for the same make/model
* Late model used cars might have remaining manufacturer’s warranty
Compared to new-car leasing, used-car leasing might be more complex. Let’s look at some of the reasons:
* New cars have an established MSRP sticker price, on which future depreciation (lease residual value) is based; used cars don’t
* New cars have industry-established residual values; used cars don’t
* New cars often have manufacturer-sponsored lease deals and rebates; used cars do not
* New cars come with a full manufacturer’s warranty; used cars do not
However, for used cars, setting residuals is not so easy. There aren’t any standard prices on which to base residuals. Condition and mileage can vary widely, even for vehicles from the same year, make, and model. Prices can be different in different parts of the country.
New-car leases have full manufacturers’ warranties, which means a leasing consumer is protected for a life of his lease as long as he chooses a lease term (months) that is no longer than along the warranty. A late-model used car may have some remaining warranty but usually not enough to pay a normal 3-year lease.
Does this show that leasing a used car is not recommended?
Definitely not. It is very possible to have a great deal on a used car lease, although a bit difficult to evaluate.
The easiest method to evaluate a second hand car lease is to do a couple of comparisons. First, compare your lease payments to loan< loans .co.uk">loan payments for the same vehicle, same terms (months), and same advance payment, if any. Also compare your used-car lease payments to lease payments for a new car from the same make and model with comparable equipment. In the two cases, if your used-car lease payments aren’t significantly less than either of the two comparisons, it may not be great deal.
James Tano has written extensively on Automotive . He comes from TX. You may want to check out his other guide on Auto and Car Insurance tips, and Used Cars For Sale guide!
