zzdcar
Home
/
Reviews
/
Buying
/
Used Car Leasing Is On The Rise, But Is It A Smart Move?
Used Car Leasing Is On The Rise, But Is It A Smart Move?-October 2024
2024-02-19 EST 22:09:59

With record new car sales in 2015, industry analysts are worried about an inflated pre-owned market with more trade-ins and cars coming in off lease. To help move inventory, companies like Toyota and Ally Financial are starting to offer lease programs for lightly used cars.

While leasing was long mostly the purview of new cars—in fact, one of its biggest benefits—more and more automakers and financiers are getting into this pre-owned lease game. Here’s :

Ally launched Ally Pre-Owned SmartLease after a pilot earlier this year. Now the product is available to Ally’s more than 17,500 dealership partners nationwide.

The lease program will “tap into that [used-vehicle leasing] marketplace” and “the needs we think are emerging and growing,” Tim Russi, Ally’s president of auto finance, toldAutomotive News last week at the American Financial Services Association Vehicle Finance Conference in Las Vegas.

[...] The captive finance arms for the Porsche, BMW and Toyota and Scion brands also have started used-vehicle leasing programs recently. Porsche plans to reimburse dealers for loaner vehicle expenses for both nonwarranty and warranty repairs to encourage dealers to add to their loaner fleets, executives said after the brand’s make meeting last week at the National Automobile Dealers Association convention in Las Vegas.

Car buyers have asked me about pre-owned leasing, and for a while the options were limited. Most dealers either didn’t want to be bothered with it or offered lease programs that didn’t offer significant savings over a new car lease.

Of course, if you are the type that thinks , the thought of leasing a pre-owned car sounds even more ridiculous. A lot of people simplify leasing as really just “renting” a new car for a set period of time. However, since the bulk of your lease payments are comprised of the depreciation that impacts a new vehicle within the first few years, leasing a pre-owned car may offer some serious savings.

Car dealers often make big deals out of leasing. On its face, you can get a brand new, warrantied…

Used cars have already taken the hardest depreciation hit, and therefore the residual value gap over the course of the lease will be much narrower than a new vehicle. The downside, of course, is that interest rates which translate to money factors on a lease are usually much better on new cars, so a used vehicle interest rate on a lease may pump the payment up a little.

One of the biggest concerns with leasing a used car is making payments on a car that you won’t own and will incur out-of-warranty repairs. This is why it is crucial for buyers considering a pre-owned lease to either choose a car with a solid track record of reliability and/or something with the balance of a factory-backed Certified Pre-Owned warranty.

Lexus has been offering lease programs for itsvehicles for a while, and the brand has one of the most comprehensive CPO programs in the industry. Lexus will cover you for six years or unlimited miles (yes, unlimited miles) from the original service date. And in terms of reliability, it’s hard to do much better than a Lexus.

Let’s say you were looking for a nice luxury crossover like the super-popular You could get something like this loaded with premium package, navigation, blind-spot detection and all kinds of extras. It has an asking price of just under $36,000 and an original MSRP that pushed $50,000. Because the original in-service date on this car was October 2013, you would be covered until October of 2019.

Now here is where it gets really interesting. The advertised lease special on a 2016 RX goes for $419 a month for 36 months/10k miles with $4000 down (before taxes and fees) for a $46,000 car. The vast majority of that is paying down the depreciation. Based on the average trade-in values of a 2011 RX, a 2014 RX would only depreciate about $6,000 or so. This means that a lease payment on that ‘14 model would be vastly cheaper than a new lease.

For buyers in the market for a pre-owned car who want to keep their monthly payments down and don’t plan on owning long term, pre-owned leasing could be a nice alternative if they shop smart.

Comments
Welcome to zzdcar comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Buying
At $6,700, Is This 1987 VW Westfalia Weekender A Van In Need That’s A Deal Indeed?
At $6,700, Is This 1987 VW Westfalia Weekender A Van In Need That’s A Deal Indeed?
In order to find a Westie Weekender that’s not crazy expensive, you might have to make a few concessions. Today’s pop-top makes those for you. Let’s decide if its present state demands that the price does too. Years ago a family friend, who has long since passed away, owned...
Oct 23, 2026
What Do You Want to Know About the Ram 1500 TRX?
What Do You Want to Know About the Ram 1500 TRX?
We may be in the midst of the worst in over a decade, but that didn’t stop me (a smart and rational person) from asking Stellantis for the keys to a 2022 Ram 1500 TRX to roadtrip for the weekend. Since they’re a bit kooky, like me, they obliged....
Oct 23, 2026
The Maserati Levante GTS Invites You to Forget You’re Driving a Crossover
The Maserati Levante GTS Invites You to Forget You’re Driving a Crossover
You feel it the moment you get into the car and sink into its supple, coffee-colored interior. Your hands reach for the wheel and wrap comfortably around its leather-wrapped edges. Everything is plush and smooth, almost too inviting to the touch. You gaze around the cabin and see the...
Oct 23, 2026
Mazda Fixed the Third Biggest Problem With the MX-30
Mazda Fixed the Third Biggest Problem With the MX-30
Mazda’s first battery electric vehicle, the , isn’t exactly the most compelling EV on the road. Its first issue is range — it goes just 100 miles on a full charge, something Mazda’s attempted to solve by for long trips. Its second issue is size, in that it rides...
Oct 23, 2026
The 2023 Nissan Z Is More Fun Than the Toyota Supra at a Cheaper Price
The 2023 Nissan Z Is More Fun Than the Toyota Supra at a Cheaper Price
Face it: You’re worried about the 2023 Nissan Z. You heard . You read that it’s , which itself was an update of the 350Z platform, a chassis approaching its 20th birthday. You’re wondering how the new Z can possibly . I was worried, too. But you and I...
Oct 23, 2026
CarMax Thinks You'll Pay $8,000 Over Sticker For This Used 2017 Mitsubishi
CarMax Thinks You'll Pay $8,000 Over Sticker For This Used 2017 Mitsubishi
This absolutely has brought on almost comical markups on all kinds of new and used cars. Here’s a particularly egregious one: CarMax wants to sell you for $29,998 — or $8,188 more than what this 31,000-mile car stickered for when it was brand-new. found this bewildering listing and I’m...
Oct 23, 2026
Copyright 2023-2026 - www.zzdcar.com All Rights Reserved