How To Pick A Used Car Lease Deal
Posted: 31st May 2017
Car Leasing offers the opportunity to get cars at cheaper, more affordable prices than is otherwise the case with, for example, car finance. Car finance can be out of reach for some people with the higher monthly payments. Leasing doesn’t have that issue and if you are aiming for a used car, those payments are even lower.
When it comes to choosing what type of car to lease, you have three options. New cars are available on Contract Hire Leasing. You have the choices of nearly new and used. There are advantages to choosing a used car over the other two options.
The value of a used car
Unlike car finance, car leasing doesn’t cover the value of the car, which is why car finance payments are so high in comparison with leasing. Car leasing covers the depreciation in value of the car over the period of the lease. Because the depreciation value will always be lower than the value of the vehicle, the Leasing payments are considerably lower.
Cars are most affected by depreciation when they are new. They lose most of their value in the first three years, from the moment they are first driven. Some cars lose 20% off their value simply being driven out of the showroom. Keeping that in mind, new and nearly new cars will be more expensive to lease.
Used cars have already had their value greatly depreciated in most situations. This means that the monthly payments for these cars are always going to be lower because the vehicle depreciates slower.
What is a good used car lease deal?
With this in mind, theory tells us that the older the car, the less depreciation it will suffer and therefore it will be cheaper to lease. However, that isn’t necessarily a good deal for you. The older the car, the more risk of mechanical failures. This means the maintenance costs of that car may outweigh the value of your lease deal.
The key to getting a great used car lease deal is the age of the car. After the first three years, depreciation on cars slows. After three years most cars are still under manufacturer’s warranty, meaning that if anything major does fail, you can get it repaired without additional cost.
At three years old, most cars will now have plenty of interior technology including touchscreen infotainment systems and so on. But also with green technology in the engine that makes these cars much more efficient. These cars are also not affected by the vehicle tax changes that came into force this year.
A good used car lease deal is about finding the right aged car for the best price and three years seems like a good age to consider.
Getting that good used car lease deal
All lease deals are affected by certain factors and getting the best out of these factors can lead to a great deal. Lease payments are affected by the deposit you choose to put down, the length of your lease, the age of your car, your mileage allowance and your credit rating.
The deposit for your used car
When you place a deposit down on a car, you are paying off a substantial chunk of your agreement right at the beginning. It is not mandatory, but it is advantageous. By choosing to pay that chunk off, you have less to pay over the remaining lease period, thereby lowering your monthly costs, making it more affordable to budget for.
If through choice or necessity, you cannot pay a deposit, there are options to get your used car on no deposit car leasing. However, because you aren’t paying that substantial amount at the start, the entire cost is instead spread across the remaining period, therefore, raising those monthly payments.
Your deposit amount can be paid three different ways.
- Three months worth of monthly payments
- Six months worth of monthly payments
- Nine months worth of monthly payments
It is something to consider if possible.
How long you want to lease for
With a new car, this is less of a concern because the car is under warranty for the usual duration of the agreement. Lease agreements last between 24-60 months, with most hitting 48 months. However, there is a slightly different concern with a used car.
With a longer lease, the cost of the lease is spread out more over the months, thereby lower the payment amounts. However, with a used car, the longer the lease is, the more likely you are to enter the territory where things start to go wrong.
If you lease a three-year-old car, for 60 months, it will be in its eighth year by the time you hand it back to the leasing company. This can mean you will be paying for maintenance costs long before you need to hand it back.
With that in mind, the short lease between 24-48 months might be of better consideration. The monthly payments may be slightly higher, but you are likely to avoid any maintenance costs further down the line. Especially considering manufacturer’s warranty will likely cover any major costs for at least a year or two for most manufacturers.
Mile after mile
With leasing, a number of miles you drive are important. It is why you are asked to decide on an Annual Mileage Allowance. The more miles you drive, the more your car depreciates. Whilst depreciation slows on cars older than three years, it doesn’t stop. This means that you still have to be frugal with your mileage allowance.
The average Briton drives 9000 miles a year. The lower your allowance, the lower your monthly payments. Something to keep in mind when you are getting your used car lease deal.
Choose your car
Leasing a used car can be an excellent choice and is well worth considering. If you have browsed our great selection of cars and know which used car you want, enquire with us. Our dedicated team will help get you a great used car lease deal that suits your needs and desires.