Can You Lease a Used Car

Yes, you can lease a used car—especially certified pre-owned (CPO) vehicles from dealerships. While not all used cars qualify, leasing a CPO car can offer lower monthly payments, reduced depreciation risk, and warranty protection. This guide covers everything you need to know to make an informed decision.

Key Takeaways

• Leasing used cars is possible: Many dealerships offer lease programs for certified pre-owned (CPO) vehicles, giving you access to newer models at lower costs.
• Lower monthly payments: Used car leases typically have lower monthly payments than new car leases due to reduced depreciation and lower capitalized costs.
• Warranty and inspection included: CPO vehicles undergo rigorous inspections and come with extended warranties, offering peace of mind similar to new cars.
• Shorter lease terms available: Used car leases often come with shorter terms (12–36 months), giving you more flexibility.
• Credit and eligibility matter: Lenders still assess your credit score and financial history, so good credit improves your chances of approval.
• Mileage and wear limitations apply: Like new leases, used car leases have mileage caps and condition requirements at return.
• Not all used cars qualify: Only late-model, low-mileage, well-maintained vehicles—usually CPO—are eligible for leasing.

Can You Lease a Used Car? The Short Answer

Yes, you absolutely can lease a used car—but with some important caveats. While leasing is traditionally associated with brand-new vehicles, the automotive industry has evolved to include certified pre-owned (CPO) cars in lease programs. These aren’t your average “used” cars you’d find at a private sale or independent lot. Instead, they’re typically late-model vehicles (usually 1–3 years old) with low mileage, a clean history, and a thorough inspection from the manufacturer or dealership.

So why consider leasing a used car? For many drivers, it’s a smart financial move. You get access to a nearly new vehicle—often with the latest tech and safety features—without paying the steep depreciation that hits new cars the moment they leave the lot. Plus, monthly payments are usually lower than those for new car leases. But it’s not as simple as walking into any used car lot and signing a lease. There are specific requirements, limitations, and benefits to understand before you commit.

How Does Leasing a Used Car Work?

Leasing a used car works similarly to leasing a new one, but with a few key differences. Instead of leasing a vehicle straight from the factory, you’re leasing one that’s already been driven—usually by a previous lessee or as a company demo car. These vehicles are often returned after a 24- or 36-month lease and then inspected, reconditioned, and certified by the dealership or manufacturer.

The Certified Pre-Owned (CPO) Connection

Most used cars available for lease fall under the certified pre-owned (CPO) umbrella. CPO programs are offered by nearly every major automaker—Toyota, Honda, Ford, BMW, Mercedes-Benz, and more—and they come with strict standards. To qualify, a vehicle must:

• Be within a certain age range (typically under 5 years old)
• Have low mileage (often under 60,000–80,000 miles)
• Pass a multi-point inspection (usually 150+ checks)
• Have a clean title and no major accident history
• Come with an extended warranty (often 12 months/12,000 miles or more)

Because CPO vehicles meet these high standards, lenders and leasing companies are more willing to offer lease terms. Think of it as leasing a “gently used” car that’s been vetted and backed by the manufacturer.

The Lease Process for Used Cars

The process of leasing a used car is nearly identical to leasing a new one:

1. Find a qualifying vehicle: Start by searching dealership websites or CPO inventory tools for used cars marked as “lease eligible.”
2. Check your credit: Lenders will review your credit score and financial history. A score of 660 or higher improves your chances of approval and better rates.
3. Negotiate the capitalized cost: This is the negotiated price of the car, similar to the “sticker price” in a new lease. Since used cars depreciate faster, this number is typically lower.
4. Agree on the residual value: The residual is the car’s estimated value at the end of the lease. Used cars often have higher residual percentages because they’ve already taken the biggest depreciation hit.
5. Set mileage and term: Most used car leases range from 12 to 36 months, with mileage limits between 10,000 and 15,000 miles per year.
6. Sign the lease agreement: Once approved, you’ll sign the contract and begin making monthly payments.

One advantage? You might skip the down payment. Many used car leases are advertised as “sign-and-drive,” meaning you pay only the first month’s payment, registration, and fees at signing.

Pros and Cons of Leasing a Used Car

Like any financial decision, leasing a used car has its upsides and downsides. Let’s break them down so you can decide if it’s the right move for you.

Advantages of Leasing a Used Car

Lower Monthly Payments: This is the biggest draw. Because the car has already lost a chunk of its value, the depreciation cost—the main factor in lease payments—is lower. For example, leasing a 2-year-old Honda Accord might cost $250/month, while a brand-new one could be $350/month or more.

Reduced Depreciation Risk: New cars lose up to 20% of their value in the first year and 50% within three years. By leasing a used car, you avoid that initial depreciation hit. You’re essentially paying for the next phase of depreciation, which is slower.

Warranty Coverage: CPO vehicles come with extended warranties that often cover major components like the engine, transmission, and electronics. This means you’re protected against unexpected repair costs during the lease term.

Latest Features Without the New Car Price: Many used cars are only a year or two old, so they still have modern infotainment systems, advanced safety features (like lane-keeping assist and automatic emergency braking), and fuel-efficient engines.

Shorter Commitment: Used car leases often come with shorter terms, giving you the flexibility to upgrade more frequently or switch to ownership if your needs change.

Disadvantages of Leasing a Used Car

Limited Selection: Not every used car qualifies for leasing. You’re restricted to CPO inventory, which may be smaller than the general used car market. If you’re looking for a specific model, trim, or color, you might have fewer options.

Higher Mileage May Be an Issue: Even though CPO cars have low mileage, they’re not brand new. If you drive a lot, you might hit the mileage limit faster, leading to excess mileage fees at the end of the lease.

Wear and Tear Concerns: While CPO cars are inspected, they’ve still been driven. There could be minor cosmetic issues or mechanical quirks that aren’t covered under warranty. Always inspect the vehicle thoroughly before signing.

Resale Value Uncertainty: At the end of the lease, the car’s actual value might be lower than the residual value set in the contract. This could affect your options if you want to buy it out.

Fewer Incentives: New car leases often come with manufacturer incentives, cash rebates, or low-interest financing. Used car leases rarely offer these perks, so you might miss out on extra savings.

Who Should Consider Leasing a Used Car?

Leasing a used car isn’t for everyone, but it’s a great fit for several types of drivers.

Budget-Conscious Buyers

If you want a reliable, modern car but can’t afford high monthly payments, a used car lease can stretch your dollar. You get more car for less money—perfect for young professionals, families on a budget, or anyone looking to minimize transportation costs.

Tech-Savvy Drivers Who Like to Upgrade

Love having the latest features but don’t want to commit to a 5- or 7-year loan? A 24-month used car lease lets you drive a nearly new vehicle with current tech, then swap it out for something newer in a couple of years.

People Who Don’t Drive Much

If you commute short distances or work from home, you’re less likely to exceed mileage limits. This makes you an ideal candidate for a used car lease, especially if you prefer lower payments and don’t need a brand-new vehicle.

Those Wanting to Avoid Major Repairs

With a CPO warranty, you’re covered for most major repairs. This is a big plus if you’re not mechanically inclined or don’t want the stress of unexpected repair bills.

Lease Switchers

If your current lease is ending and you’re not ready to buy, leasing a used car can be a smart bridge. You avoid the hassle of selling your current car and get into a newer model with lower payments.

Tips for Getting the Best Deal on a Used Car Lease

Ready to lease a used car? Follow these practical tips to maximize value and avoid common pitfalls.

1. Shop CPO Inventory Only

Stick to certified pre-owned vehicles from reputable dealerships. Avoid private sellers or non-certified used cars—they won’t qualify for leasing, and you’ll miss out on warranty protection.

2. Compare Multiple Offers

Don’t settle for the first deal you see. Check CPO lease offers from at least three dealerships. Use online tools like Edmunds, Kelley Blue Book, or manufacturer websites to compare monthly payments, terms, and incentives.

3. Negotiate the Capitalized Cost

Just like with a new car lease, you can negotiate the price of a used car. Research the car’s market value using KBB or Edmunds, then use that info to lower the capitalized cost. Every dollar saved reduces your monthly payment.

4. Watch the Money Factor

The money factor is the lease equivalent of an interest rate. It’s usually a small decimal (like 0.00250). To compare it to an APR, multiply by 2,400. A money factor of 0.00250 equals a 6% APR. Aim for the lowest possible rate—your credit score plays a big role here.

5. Choose the Right Lease Term

Shorter terms (12–24 months) mean higher monthly payments but less total interest. Longer terms (36 months) lower your monthly cost but increase the risk of owing more than the car is worth. Match the term to your budget and driving habits.

6. Understand the Residual Value

The residual value is the car’s estimated worth at lease end. A higher residual means lower monthly payments. Ask the dealer for the residual percentage—ideally, it should be 50% or higher for a 36-month lease.

7. Read the Fine Print

Check for excess wear-and-tear guidelines, mileage penalties, and early termination fees. Know what’s considered “normal” wear versus damage that could cost you at return.

8. Consider Gap Insurance

While most leases include gap coverage, it’s worth confirming. Gap insurance covers the difference between what you owe and the car’s value if it’s totaled or stolen—essential protection for any lease.

Real-World Example: Leasing a Used Car

Let’s say you’re interested in a 2022 Toyota Camry LE with 20,000 miles. It’s certified pre-owned and listed at $24,000. Here’s how the lease might break down:

• Capitalized cost: $24,000 (negotiated down from $25,000)
• Residual value (60% after 36 months): $14,400
• Depreciation: $9,600 over 36 months = $267/month
• Money factor: 0.00200 (4.8% APR)
• Finance charge: ~$80/month
• Monthly payment (before taxes/fees): ~$347
• Mileage limit: 12,000 miles/year
• Due at signing: First month’s payment + $500 fees = $847

Compare that to a new 2024 Camry LE with a $350/month payment and a $2,000 down payment. The used lease saves you over $100/month and $1,150 upfront—money you could put toward savings, travel, or other goals.

Conclusion: Is Leasing a Used Car Right for You?

Leasing a used car is a smart, cost-effective alternative to buying new or financing a used vehicle. It combines the affordability of a used car with the flexibility and protection of a lease. With lower monthly payments, warranty coverage, and access to modern features, it’s an option worth considering—especially if you’re budget-conscious, don’t drive excessively, and prefer to upgrade regularly.

However, it’s not a one-size-fits-all solution. You’ll need good credit, a clear understanding of lease terms, and a willingness to stick to CPO inventory. Do your research, compare offers, and read the contract carefully. When done right, leasing a used car can be a win-win: you get a great ride without the financial sting of a new car.

So, can you lease a used car? Absolutely. And with the right approach, it might just be the best decision you make for your wallet—and your wheels.

Frequently Asked Questions

Can you lease any used car?

No, not every used car qualifies for leasing. Most leases are only available for certified pre-owned (CPO) vehicles from dealerships that meet strict age, mileage, and condition standards.

Do you need good credit to lease a used car?

Yes, lenders still check your credit score and financial history. A score of 660 or higher improves your chances of approval and helps you secure lower interest rates.

Are used car leases cheaper than new car leases?

Generally, yes. Used car leases have lower monthly payments because the vehicle has already experienced the steepest depreciation, reducing the amount you pay each month.

Can you buy the car at the end of a used car lease?

Yes, most leases give you the option to purchase the vehicle at the end of the term for the residual value stated in the contract. This can be a good deal if the car is in great condition.

What happens if you exceed the mileage limit on a used car lease?

You’ll be charged a per-mile fee, typically $0.10 to $0.25, for every mile over the limit. It’s important to choose a mileage allowance that matches your driving habits.

Do used car leases include maintenance and repairs?

Not automatically, but CPO vehicles come with extended warranties that cover major repairs. Regular maintenance like oil changes is usually your responsibility unless included in a special program.