Yes, you can lease a used car, but it's a far less common and often more complex process than leasing a new vehicle. This option is typically called a used car lease or a pre-owned lease. Instead of dealerships or manufacturers, specialized finance companies usually offer these leases on certified pre-owned (CPO) vehicles that are typically under three years old. While it can provide access to a nicer car with lower monthly payments than a used car loan, it often comes with higher costs and stricter terms, making a traditional loan or buying a less expensive model a more straightforward choice for most used car shoppers.
The primary source for a used car lease is not a mainstream automaker's finance arm but rather independent third-party leasing companies. They focus on high-quality, late-model used cars that have passed rigorous inspections, similar to CPO programs. The leasing structure is familiar: you pay a down payment, make monthly payments based on the car's current value and predicted value at lease-end (the residual value), and have an annual mileage limit. At the term's end, you simply return the car.
However, the economics are different. Because a used car has already undergone its steepest depreciation, the residual value—the estimated worth at lease-end—is set much more conservatively. This results in a smaller difference between the current price and the future value, which means your monthly payments don't drop as significantly as you might expect. You're also paying to drive a car during its years of higher maintenance likelihood, yet you're still responsible for repairs outside the basic factory warranty.
| Consideration | Used Car Lease | Used Car Loan |
|---|
| Monthly Payment | Generally lower than a loan for the same car. | Higher monthly payment. |
| Long-Term Cost | You build no equity; you return the car. | You own the car after the final payment. |
| Mileage Limits | Strict limits (e.g., 10,000-12,000 miles/year); excess fees apply. | No mileage restrictions. |
| Wear and Tear | Subject to inspection and potential fees at return. | You are responsible for all upkeep, but no fees. |
| Vehicle Choice | Limited to specific, often certified, late-model used cars. | Any used car that can be financed. |
| Down Payment | Often required, similar to a new lease. | Often required, but can sometimes be minimized. |
For the average used car buyer, a loan is typically more advantageous because you're working toward ownership. A used car lease is a niche product best suited for someone who understands the terms, wants a near-new car for a short period, and prioritizes lower monthly cash flow over long-term value.
