Why Leasing A Used Car Could Turn Out To Be One Hell Of A Good Deal

Industry News

All leased cars are returned eventually, so why not lease them again?

When it comes to buying or leasing a new car, people typically have a preference for one over the other. With buying, at least you’ll one day own the vehicle, whereas with leasing you’re left with nothing of value when the lease ends. Then again, leasing does allow you to get a new car every two or three years. Not at all surprisingly, leasing, according to Automotive News and Experian, has "surged as a share of new-vehicle transaction to 29 percent in the fourth quarter of 2015."

That figure is up from 24 percent only two years earlier. Why has leasing become more popular? Because finance companies realized they could help increase sales by providing customers with lower monthly payments via leasing. Here’s the problem with that today: leases end. In other words, dealerships are experiencing a flood of off-lease vehicles being returned to market. 3.1 million off-lease vehicles, to be precise, and that figure will increase in the coming years. And with all of that new-used inventory, the once rare concept of used car leases is becoming more popular. That’s right, leasing a used car. In fact, 3.8 percent of all leases late last year were on used cars.

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Welcome to the world of certified leasing, and companies like Toyota, Ally Financial and BMW are even encouraging this practice. Toyota, Lexus, and Scion are essentially the leaders in certified use car leases at the moment, with terms that last an average of 36 months, which is very similar for new car lease periods. Toyota Financial Services is offering incentives to buyers, like "discounts on rent charges, which is a finance fee paid to auto lenders, similar to an interest rate on a loan." Certified leasing isn’t new, as many of you likely know, but it hasn’t been especially popular. But with a flood of leased vehicles being returned to dealership lots, a solution had to be found.

So the next time you’re in the market for a car, leasing a second-hand car could turn out to be one hell of a good deal. Remember, leased vehicles have yearly mileage limits and have been serviced only by the dealership, so a second-hand lease is really a safe bet. Bottom line is dealerships are anxious to get these certified used cars off their lots fast and you could benefit.

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