Can A Dealer Lease A Used Car?

The unfortunate global events have undoubtedly affected the state of the current economy, which is why leasing new car models or buying a vehicle has become impossible for many. It’s the reason people are considering leasing second-hand models – but can a dealer lease a used car?

Yes, a dealer can lease a used car, but only if it is in stock. Dealerships usually lease CPO (certified pre-owned) vehicles, which means they come in the best possible condition for a highly affordable price. However, limited warranty, high interest rates, and low supply are the downsides of these kinds of leases.

A person holding a Lexus car key

If you want to know more about the upsides and disadvantages of these types of leases, find all of the answers in the following article.

Yes, a Dealer Can Lease a Used Car

It is legal for dealers to lease a used car, but keep in mind that it is far from a common practice – less than 10% of all leases are those involving pre-owned vehicles. As with the unused models, a leasing price is determined based on the initial value of a car and the residual value it will have after the leasing period ends.

Most Cars Available for Lease Are Certified Pre-owned

Many dealerships lease only CPO vehicles, which means that they are approved by the manufacturer. As a rule of thumb, CPO cars are newer models with not a lot of mileage on the odometer, and they come without an accident record.

Before being leased, these vehicles must undergo a very thorough professional inspection to determine if the car meets the manufacturer’s standards. It will most certainly bring you peace of mind to know that the car you’ll be driving is entirely safe and problem-free.

Many manufacturers offer leasing of CPO vehicles through special programs (Honda, for example, has HondaTrue Certified). However, keep in mind that these cars can only be leased in authorized dealerships. For instance, if you want to buy a CPO Toyota, you’ll most likely have to contact the nearest Toyota’s official dealer.

Can You Lease a Used Vehicle Outside of the Car Dealership?

Another possibility when you want to lease a second-hand car is taking over someone else’s lease. Websites such as Swapalease or LeaseTrader connect those selling their leases with those interested in buying them. However, remember that this kind of lease is non-negotiable and that it implies a few extra fees down the road.

Man driving a Mercedes-Benz

When Is Leasing a Used Car a Good Idea?

Leasing a preowned vehicle is the most affordable option when you’re in need of a car. Money-wise, it takes a win over all other possibilities – buying a new or used model or leasing an unused vehicle. Here are some of the financial benefits you’ll face:

  • Your monthly installments will be less expensive – value depreciation is much more prominent with newer models, which affects the higher price of the lease,
  • You won’t have to pay sales tax – leasing is not taxed, since you’re not buying a new or second-hand car,
  • Down payment, if existing, is much lower than in all the cases mentioned above.

Of course, the quality of a new vehicle is unmatched, even if you opt for a CPO model. However, when you’re in need of a quality, but the inexpensive vehicle, leasing a used car from a dealer can be a good solution.

The Process of Leasing a Pre-owned Car – A Step by Step Guide

If you fish to go through with leasing a second-hand car, make sure you follow the next steps:

  • Decide which brand and model you want to lease,
  • Find a dealer who offers it (and make sure it’s a trustworthy one),
  • Don’t hesitate to negotiate the price,
  • Get informed about all the fees you’ll be obliged to pay,
  • Read the contract carefully before signing (ensure you understand all of the dealer’s conditions and be confident you can meet them).

Does Leasing a Pre-owned Vehicle Have Any Cons?

Of course, these deals are not all sunshine and roses. There are a few downsides to this type of leasing. For starters, your choices are limited – not all of the dealers offer CPO vehicles, and even if they do, you may not find the model you want. Simultaneously, remember that pre-owned cars usually come with higher interest rates than new ones.

The Maintenance Costs of Cpo Vehicles

Maintenance and repair expenses can also be considered disadvantages of leasing CPO models. While you’ll be entitled to a manufacturer’s warranty, keep in mind that it usually covers only powertrain issues, not wear and tear problems. That means that you’ll have to get an additional warranty or pay maintenance and repair costs out of your pocket.

If you go with the second option, ensure to do your research before choosing the CPO model, so you don’t give all your money up for a car you don’t even own. The table below is just the start:

Most reliable brandsLeast reliable brandsHighest maintenance costLowest maintenance cost
LexusAlfa RomeoBMWToyota
HyundaiFordMercedes – BenzScion
DaciaLand RoverVolvoHonda

Should You Consider Leasing a Used Car?

Leasing a second-hand vehicle, especially if it’s CPO, can be a financially very profitable solution. However, if you go with this option, ensure you choose a highly reliable model that will serve you well in the next few years, but also one whose repairs and maintenance won’t give you plenty of headaches.

Once you make a list of cars that seem like a good fit, all that is left to do is find dealers that offer them and prepare to put your negotiation skills to the test.