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Lease Used Car - Used Car Leasing Explained
UPDATE : Beginning in October 2008, financing companies, banks, and car leasing companies in the U.S. essentially stopped leasing used cars. For this reason we are suspending this article until such time as the economy improves and used car leasing becomes available again.
However there is one good way still available to
lease used cars, and get good bargains – through a lease takeover, or lease
assumption.
Here's how it works. People who are
currently leasing but want out of their leases offer their cars and leases for taking over. Some are
desperate and will not only let you take over their low lease payments,
but will actually give you cash. This is a great way to get a relatively new low-mileage car at a low monthly payment.
The single best way to drive a late model car at the lowest possible cost is to take over someone's existing car lease.
Why?
Most existing car leases were taken out months ago when car manufacturers were offering incredible money-losing deals and very low monthly payments. Many people who took those great lease deals now need to get out after losing jobs or suffering other financial distress. Most lease companies allow those leases to be transfered to someone else by simply paying a transfer fee. Since the original lessee got a good deal — a deal that is not possible today — anyone taking over the lease will inherit the same great deal, same low monthly payment, with NO MONEY DOWN, no upfront sales tax, and in many cases, a CASH incentive from the "seller." There is no other way to get a late model car this cheap with payments this low.
How?
Online companies such as Swapalease.com
act as match-makers between people who want out of a lease, and people who want to take over a lease. Swapalease.com is the largest online lease marketplace and has the largest inventory of lease takeover vehicles. Look over the vehicle listings and if you find a car you like, they help arrange the lease transfer with the lease company. It's easy and fast.
Read our
article, Short-Term Leases
- Lease Takeovers for more details.
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THE FOLLOWING ARTICLE IS CURRENTLY SUSPENDED
Leasing 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.
The logic of used
car leasing 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.
Used-car leasing can
apply to any late model used car, regardless of where you obtain it: from
a dealer, from the Internet, or from an individual.
Good
deal or not?
Used-car
leases are more difficult to evaluate than new car leases because there
are more variables to consider, such as the initial value of the car (which
is subject to market fluctuations), initial mileage, installed equipment,
and overall vehicle condition.
This is not to suggest
that leasing a used car is not a good deal. It's just that it requires
a little more attention than a typical new-car lease, which is more straghtforward.
How
to compare deals
One
of the best ways to evaluate used-car leasing is to compare your used-car
lease quote to a new-car lease quote for the same make/model vehicle.
New-car manufacturers' promotional incentives, rebates, and discounts
often can temporarily make a new-car lease the better deal. So always
compare before you decide.
Select
the right used car to lease
As
with new-car leasing, the best vehicles to lease are those whose resale
values depreciate the least. For example, you may be able to lease a used
Mercedes for the same payment as a lower priced used Chevrolet. In fact,
the vehicle make/model recommendations that we provide in our Lease
Kit for new cars, are exactly the same recommendations for used
cars. Generally, previously-owned luxury cars are good lease candidates.
Research
your vehicle
Once you've
decided on a particular vehicle, do your homework to determine a fair
price. Just like new-car leasing, getting the right price is key to a
good deal. We recommend that you use Edmunds
and look for their True Market Value (TMV) appraisal price.
Find
the vehicle you want
You can find used vehicles in your newspaper classifieds, in "autotrader"
magazines at your supermarket, or in local used car lots.
However, the best
way to find used cars is online — by searching on the Internet for
cars for sale in your area on sites such as UsedCars.com
because you simply plug in your ZIP code, what you're looking for, and
a price range, and you'll get back a detailed list of already discounted
cars from local dealers.
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. In most cases, your lease
company will require an inspection anyway and there is no need for a separate
inspection.
Watch
the mileage
The
vehicle you lease should have no more than average mileage for the age
of the car. A high-mileage car is unlikely to make a good lease deal.
See the following table of recommended maximum mileages:
- 1 year old vehicle:
15,000 miles
- 2 year old vehicle:
30,000 miles
- 3 year old vehicle:
45,000 miles
Get
your lease financing
You
have two alternatives to financing your lease:
- Accept the lease
company used by the dealer from whom you acquire the vehicle. However,
be aware that few dealers arrange leases on used cars. Therefore, this
is not always an option.
- Arrange your own
lease financing. This way, you find the car you want at a dealer or
from an individual, negotiate your best price, and get a check from
your lease provider. We recommend Primelease.
Consider
repair costs
Most
used-car deals don't come with a warranty (unless there is some remaining
manufacturer's new-car warranty). In fact, most deals are "as-is,"
meaning that should you have any problems after you've signed the deal,
the seller is not responsible in any way. Any problems will be your responsibility,
even if you lease.
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 relatively
short period of time. See our article, Certified
Cars, for more details.
Gap
protection
Just as with a new-car
lease, you need "gap" protection to cover you if 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 your lease.
Most leases, even
used-car leases, now come with no-cost gap protection included. If yours
doesn't, check with your car insuance company. Some offer it, some don't.
Before
you sign your contract
Used-car
leases work exactly like new-car leases. All the lease how-to information
and advice that we provide in our Lease Guide applies. Make sure
you know how leasing works and how monthly payments are calculated.
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 leases. 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.
Another
way to lease a used car
Finding a lease company who still leases used cars is getting more difficult
as our economy gets worse. But there is still one way that many people
lease used cars, and get good bargains – lease takeover, or lease
assumption.
Many people who are
currently leasing want out of their leases for various reasons. Some are
desperate and will not only let you take over their low lease payments,
but will actually give you cash. Online companies such as Swapalease help match up lease "sellers" and "buyers." Read our
article, Short-Term Leases
- Lease Takeovers for more details.
For
more, see LeaseGuide.com
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