Can You Lease a Used Car?

Leasing is a great way to save money and get a brand new car every 3 or so years. While this option is usually reserved for new vehicles only, there is also the possibility of leasing a used car.

Here, we’ll go through all the different possibilities with a used car, and what it means for you as a customer.

Can You Lease a Used Car?

The short answer is yes, you can lease a used car. But the reality is a bit more complicated. Leasing, in general, is associated with brand new vehicles, factory warranties, and the “new car” experience, which is why the idea of leasing a used car often catches people off guard. It is also not a widely promoted option, so many shoppers and dealerships are not aware that used car leasing is possible.

Additionally, not all used vehicles qualify for leasing. They’re typically certified pre-owned (CPO) vehicles offered through franchised dealerships. Generally, these need to be about 4 to 6 years old and have fewer than 85,000 miles on the odometer, although exact requirements can vary by manufacturer.

Leasing options are also more common among luxury brands, as these vehicles tend to hold their value better and are more suitable for manufacturer-backed lease programs.

How Used Car Leasing Actually Works?

At its core, leasing a used car follows the same structure as leasing a new one.

Instead of paying for the entire vehicle, you’re paying for how much value the car is expected to lose during your lease term.

Here’s how that plays out:

1. The lender sets a sales price
2. They estimate what the car will be worth when the lease ends (the residual value)
3. Your payments are based on the difference between those two numbers

Since used cars have already absorbed much of their depreciation, they tend to lose value more slowly. This results in lower monthly payments, even if interest rates are slightly higher. At the end of the lease, you’ll return the car, or, if you like it, you may have the option to buy it.

How to Go About It?

Leasing a used car takes more effort than leasing a new one, but it’s doable with patience.

Step 1: Start with the Manufacturer

Contact the automaker’s finance arm (for example, Toyota Financial) and ask if they lease certified pre-owned vehicles.

Step 2: Get a New-Car Lease Quote

Having a comparable new-car lease quote gives you a baseline to judge whether the used lease is truly a better deal.

Step 3: Shop CPO Inventory

Look specifically for certified vehicles. Please keep in mind that CPO vehicles are not sold at every dealership. In fact, you’ll usually find these in franchised dealerships.

According to the National Automobile Dealers Association (NADA), the following manufacturers offer CPO leasing:

Step 4: Call Before You Visit

Ask to speak with a sales or internet manager and confirm whether they offer used car leases. Don’t be discouraged if you hear “no” at first, as some staff members may simply be unfamiliar with the option.

Step 5: Review the Numbers Carefully

Make sure you understand:

• Selling price
• Residual value
• Monthly payment
• Mileage limits
• Fees and taxes

Keep in mind that leasing a used car comes with lower monthly payments but with higher interest rates, so check the interest rates carefully as laid out in the leasing contract, so you’re not surprised by the amount of interest you’re paying.

Is Leasing a Used Car a Good Idea?

As with all financial options when it comes to buying a car, leasing a used car also has its pros and cons.

It’s up to you as the buyer to weigh the risks and benefits and come up with a decision. But keep in mind that when it comes to used cars, financing through a loan may be the better option than leasing.

Pros of Leasing a Used Car

• Lower monthly payments. Since used vehicles have a lower upfront cost and slower depreciation, lease payments are often more affordable than leasing a brand-new model.
• Access to luxury brands for less. Leasing a certified pre-owned luxury vehicle can make brands like BMW, Lexus, or Mercedes-Benz far more attainable, without the premium price tag of a new lease.
• More affordable lease buyout. Used vehicles typically have lower residual values, making purchasing the car at the end of the lease a more budget-friendly option.
• Insurance savings. Because insurance rates are influenced by a vehicle’s value, leasing a used car results in lower insurance premiums.

Cons of Leasing a Used Car

• Limited availability. Not every manufacturer or dealership offers used car leases, which can make finding one more time-consuming.
• Higher interest rates. Used car leases often come with a higher money factor compared to new car leases, which can increase overall costs.
• Limited warranty coverage. Unlike with new car lease which come with full warranty coverage, used cars leases come with a limited warranty. Additionally, if the car is no longer under the original manufacturer warranty, you may need to purchase an extended warranty.
• Older technology and features. Some used models may not include the latest safety systems or technology found in newer vehicles.
• Not quite brand-new. Even certified vehicles may show minor signs of wear, which is normal but worth keeping in mind.