Leasing used cars explained


Leasing a used vehicle can be an attractive deal in many ways, no least 
getting you into that luxury model or SUV, for lower monthly payments than 
a brand new one. Be prepared, however, to do some more homework to dissect 
a good deal.
 
As with new car-leasing, your price research should focus on the key 
figures that are the initial market value and the estimated residual value 
of the used car. This is harder to predict since there is no factory-set 
sticker price on used cars, and the residual percentage is very much pegged 
to a subjective current retail value. Use different sources to get a rough 
idea of the value of the used car: your local dealerships, internet 
car-evaluating tools, such as Edmunds.com and Cars.com, to name but a few. 
Another way to pin down a good estimate is to compare the lease on your 
given car to a lease on a new-car with the same make and model. This should 
give you a better picture of the difference between leasing new and going 
for used. Just like leasing a new car, used vehicle leasing is more 
attractive when residual values depreciate the least. You stand a better 
chance of finding a bargain in the high-end, luxury vehicles that keep 
their values better as used cars. 

Next, you need to check the initial mileage and the overall vehicle 
condition. The maximum mileage on a used car should be no more than 12,000 
miles a year. A 3-years old car with 50,000 miles on the clock is very 
unlikely to make a good used-vehicle lease. Check for signs of excessive 
use, like worn seat fabric, worn pedal pads and dirty engine, which might 
indicate that the odometer has been rolled back. If the car is not 
certified, you need to get it thoroughly inspected. Ask your dealer for a 
manufacturer-sponsored certification program or have your car certified by 
a qualified mechanic or inspection service.
 
Most used-car deals don’t come with gap coverage. This is a special type 
of coverage, normally offered on a new auto-lease, to cover the consumer if 
the leased vehicle is lost, stolen or damaged. Typically, auto-insurance 
policies cover only what your car is worth at the time of loss, not what 
you still owe on the lease. The difference could run into thousands of 
dollars. For peace of mind, do not enter into any used-car lease without 
gap-coverage. Arrange it separately with either the lease dealer or your 
auto-insurance company. 

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