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Lease Used Car - Used Car Leasing ExplainedLeasing used cars is a rapidly growing concept, primarily because it's possible to get excellent deals on almost-new vehicles, particularly luxury cars and SUVs. See this article from USA Today. The logic of leasing used cars is this: If leasing is based on the depreciation of a vehicle's value, then it should be less expensive to lease a used car that has already seen its most rapid depreciation during its first year. In general, it's best to consider leasing used cars that about 1-year old with low mileage. Keep the lease term relatively short (about three years or less), and lease cars that hold their values well. Used-car leasing can apply to any used car, regardless of where you obtain it: from a dealer, from an individual, from a friend. Lease a used car - good deal or not? Used car leases are inherently more difficult to evaluate than new car leases. It's harder to determine whether or not you're getting a good deal. Used cars have more variables to deal with than a new car, such as the initial value of the car (which is subject to market fluctuations), initial mileage, installed equipment, and overall vehicle condition. Where you live even has an effect on the value of used vehicles. Residuals on used cars are much more difficult to predict since, unlike new cars, there's no factory-set sticker price upon which to base the residual percentage. Residuals must be based on a very subjective current retail value, which could be different dependent on who you ask. So you have situation is which a subjective residual is based on an even more subjective retail value. Interest rates are generally higher for used car leases than for new car leases. And you may not have the benefit of being fully covered by the manufacturer's new-car warranty, which means you may have to purchase an extended warranty if you want full coverage. How
to compare deals Often, new-car manufacturers' incentives, rebates, and discounts can make a new car lease the better deal — but not always. So always compare before you decide. Pick
the right used car to lease A car that holds its resale value as a new car will also hold its value better as a used car. Many luxury cars fall into this category. These vehicles will always have lower lease payments than a similarly priced vehicle that depreciates more rapidly. For example, you may be able to lease a used BMW for the same payment as a much lower priced Chevrolet. This is not to say that you should only consider high-end used vehicles for leasing but it does suggest that smart leasers know that this is where they have the chance to find the best bargains. Research
your vehicle Use Consumer Reports and other sources such as NHTSA to look for recalls, reliability reports, etc. Verify
your vehicle Get
a certified car Inspect your vehicle If you acquire your car from an individual, or from a dealer who does not certify his cars, it is recommended that you have the car fully inspected by a qualified mechanic or inspection service. Have them look specifically for problems in areas that would cost you the most to repair later: engine, transmission, body, and frame. Also look for signs of accident or flood damage. Tires should match. Having a full set of maintenance records is not necessary, but would be very nice. If buying from a dealer from whom the car was bought/leased new, ask him if he did the maintenance. If so, he can provide the records. Make sure all standard equipment is included and working: spare tire, jack and wrench, lights, power windows/seats//door lock, radio/CD player, security system, and air conditioner. Watch
the mileage
Also look for signs of excessive use that may indicate that the odometer has been rolled back. Look for worn pedal pads, worn seat fabric, and engine dirt. Get
your lease financing
Since many used-car dealers, or even new-car dealers, or individuals from whom you might get a car don't provide lease financing on used cars, you are forced to find your own. We recommend LeaseCompare because they do all the legwork for you and find you the best rates. If you accept, you receive a check to give to the car dealer or individual. Watch
your lease length
Do not lease a vehicle that is more than three years old. By the time the lease is ended, most of the useable value of the vehicle will have been depleted, and the cost benefits of leasing disappear. Therefore, if you want the vehicle for more than three years, buy it, don't lease it. Consider
repair costs The exception to this are "certified" used cars, for which the dealer provides a limited warranty. Just be aware that these warranties typically cover only a portion of the possible problems you might encounter, and are good for a relative short period of time. If you're buying a relatively new car, the manufacturer's warranty might still be in effect, but could expire before your lease ends. This means the cost any major repairs in the final months of the lease could land in your lap. Gap protection Just as with a new-car lease, you need "gap" protection to cover the situation in which your leased car is stolen, destroyed, or totaled in an accident. Your insurance company will only pay what the car is worth, not what you still owe on the lease. The difference could be considerable, depending on how far along you are in the lease. Don't enter into any lease, new or used, without gap coverage. Used-car leases frequently don't include gap protection, as most new-car leases do. Therefore, you'll have to arrange it separately with the lease company or with your car insurance company. Be aware that some car insurance companies don't offer gap insurance. Before
you sign your contract Our Lease Kit is primarily oriented to new-car leases, but most of the features (see below) can be used equally well for used-car leases:
If you use the Lease
Kit for a used-car lease, and you're asked for the MSRP
for your vehicle, you must substitute the current used-car retail value
from Edmunds Take extra care in reading over your lease contract. Look for errors, extra charges, add-on fees, and blank spaces. Used-car leases don't have the same legal disclosure requirements as new-car lease. If you don't like what you see, don't sign. Once you've signed, there's no "grace" period in which you can back out of the deal.
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