Here's How to Tell Whether Leasing a Used Car Makes Sense for You

Want to lease a new car but can't afford the monthly payments? If that's the case, you should look into leasing a pre-owned one. That's an option that not so many people known about but is well worth checking out. In the article below we'll look into the pros and cons of leasing a certified pre-owned vehicle.

Pros of Leasing a Used Car

  • It costs less to lease a CPO (certified pre-owned vehicle) because you'll have to pay for a much smaller decrease in value (the person who leased the car before you already paid for much of the car's depreciation). In addition to lower monthly payments, you should expect to pay less at signing as well.

  • You can get a better car. Often times the monthly payments for a new, lower class vehicle are comparable to the monthly lease payments for a pre-owned luxury car so do some research and you might be pleasantly surprised. 

  • You get a well-maintained vehicle - to avoid wear and tear and excess mileage fees at the end of the lease period, first leasers usually take great care of the vehicle. In addition, certified pre-owned vehicles come with additional bumper-to-bumper warranty coverage to incentivize potential leasers.

  • You can purchase the car at the end of the lease. Since you drove it for a few years you have a pretty good idea how reliable it is and what the maintenance cost is. If you decide to purchase it, the buyout price would likely be pretty reasonable. And if the math doesn't work for you simply return the car, pay what you owe, and end-of-lease fees and walk out. 

  • Cost less to insure. The insurance premium on a leased used car will likely be lower than on a new leased vehicle.

  • Fewer sales tax - there's no way around paying sales tax. The good news is that's it's less because you are only paying for the depreciation that occurs during a car lease.
Cons of Leasing a Used Car
  • Doesn't have the latest technology. One of the main benefits of leasing a new car is that it has the latest features and technology. Most used vehicles for lease are two or three years old and might not have the most up-to-date entertainment or advanced safety systems.
  • No matter how well maintained they are, used lease cars are not perfect. Dealers usually refurbish them to make them look new again but be prepared that your used lease car will have some interior wear, scratches, and dings.
  • Watch the warranty. There's a good chance that the warranty won't cover the vehicle for the entirety of the lease period. It's important to think about that because you might be exposed to significant costs if something major goes down and you'll have to pay to have it repaired.
  • Potential higher maintenance cost. You already know from previous experience that maintenance cost increases as the car ages. With a leased car you have to maintain the vehicle and can't put off repairs or scheduled maintenance, so you have to budget for that expense, as well.
  • Unpredictable value. It's very hard, almost impossible to predict the value of a car five or six years after entering service. To protect themselves, leasing companies set the value toward the low end of the range on used-car leases. This way they don't end up with an overvalued car at the end of the lease. What that means is that a used lease car will be more expensive for you.
  • Limit on miles. As with a new car lease, there's a mileage cap that's stated in the lease agreement. Since you will be paying for every mile, make sure you know in advance what the limit is and how that compares to how much you drive each year.
  • Higher money factors. Similar to when financing a used car purchase, you should expect to pay a higher interest rate when leasing a used car. Money factor is the auto industry equivalent of APR. It's usually a decimal number that you need to multiply by 2400 to convert it to a more easily understood interest rate.
  • You don't own the vehicle at the end of the lease. Again, similar to leasing a new car, at the end of the term you return the car to the dealer and walk away.
  • You need good credit. The best lease deals are kept for customers with excellent credit scores. That's why you should check your credit report and request the reports behind them from the major credit agencies a few months before you lease a car. That way you'll have enough time to correct errors or come up with a plan for improving your credit score if it's less than perfect.

>> Check Out Our BMW Lease Offers. If You Have Further Questions Call (570) 338-6955 to Speak with One of Our Experienced Lease Specialists <<


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