(StatePoint) With an estimated 3.1 million vehicles coming off lease in 2016, the topic of whether to buy or lease a car is hotter than ever.
“Consider all your options, including used car leasing and leasing or buying a certified pre-owned (CPO) vehicle,” says Rob Christman, director of Sales, Fixed Operations at Cox Automotive.
When weighing your choices, here are a few things to consider:
Used Car Leasing
Leasing is not just for new cars, it’s simply an alternative way of financing a vehicle. Leasing a used vehicle works exactly the same as with a new car. The biggest difference is that the monthly payments will likely be less.
The lender writing the lease will determine the vehicle’s residual value, and the lease payments will be determined by the difference between the vehicle’s sale price and its residual value. Then, the lender will assign a money factor to the deal, just as they would assign an interest rate on a car purchase.
However, just as interest rates are typically higher when purchasing a used car, the same applies to the money factor when leasing a used car.
Even so, the lower sales price on a used car, combined with the higher money factor and the lower rate of depreciation, will typically equate to a lower overall lease payment, offering you more car for your money.
Another advantage is the hassle-free return at the end of the contract; the same as on a new car lease.
“Leasing a CPO is a great option if owning is not a top priority for you,” says Christman.
Why? A CPO can offer you some extra guarantees that the pre-owned vehicle you are leaving the lot with is in good condition. This is true whether you are purchasing the vehicle or leasing it.
With a CPO, you will have access to a detailed and itemized checklist of all the items inspected by a professional mechanic, as well as assurance that the vehicle passed inspection or was brought up to standards. Do your research to learn the scope and details included in this inspection, which can vary widely from one provider to another.
More information about CPOs and used car leasing can be found at autotrader.com/cpo.
There are so many ways to leave the lot with a car. Before signing on the dotted line, investigate all your options.