Automotive News

Used-car leasing has become more popular as the economy worsens. It seems like to provide a cheaper way to drive a car than new-car buying or leasing, or maybe used-car buying. But is it all it seems?

The apparent benefits of used-car leasing are:

* You avoid a new car’s rapid first-year depreciation

* Used car prices are lower than new-car prices, for the same make/model

* Late model used cars may have remaining manufacturer’s warranty

Compared to new-car leasing, used-car leasing might be more complex. Here are some of the reasons:

* New cars have an established MSRP sticker price, on which future depreciation (lease residual value) is based; used cars do not

* New cars have industry-established residual values; used cars don’t

* New cars often have manufacturer-sponsored lease deals and rebates; used cars don’t

* New cars have a full manufacturer’s warranty; used cars do not

However, for used cars, setting residuals isn’t so simple. There aren’t any standard prices on which to base residuals. Condition and mileage can vary widely, even for vehicles of the same year, make, and model. Prices could be different in different parts of the country.

New-car leases have full manufacturers’ warranties, which means a leasing consumer is protected for a life of his lease as long as he chooses a lease term (months) that is no longer than the length of the warranty. A late-model used car may come with some remaining warranty but usually not enough to pay a normal 3-year lease.

Does this show that leasing a used car is not a good idea?

Definitely not. It is very possible to have a great deal on a used car lease, although a bit difficult to evaluate.

The best way to evaluate a used car lease is usually to do a couple of comparisons. First, compare your lease payments to loan payments for the same vehicle, same terms (months), and same down payment, if any. Also compare your used-car lease payments to lease payments for a new car from the same make and model with comparable equipment. In the two cases, if you are used-car lease payments are not significantly less than either of the two comparisons, it might not be good deal.

his name is James Tano, originally comes from TX. He has written several articles about Automotive . Check out his other guide on Auto and Car Insurance tips, and Used Cars For Sale guide!