Used car leasing: lower prices, less value

  • Like leasing, only with used cars
  • Harder to find than regular leasing
  • Generally doesn't offer as good value for money

Red BMW 1 Series front

There's a sense of logic with used car leasing. Whenever you read about new car pricing, you're met with eye watering depreciation figures. Depending on who you listen to, car depreciation (depending on what car of course) can be from anywhere between 15-30% in the first year, and up to 50% in the first three years.

So we understand then, that cars depreciate heavily. So it does make sense to let someone else take that depreciation hit.


How does used car leasing work?

Used car leasing works in the same way as new car leasing. Essentially, it's like a long-term car rental. Drivers cough up an initial payment (which they don't get back), and then pay a series of fixed monthly payments. At the end of your contract, the fun starts again and you'll need to find yourself a new car.

The main difference, obviously, is in the age of the car. Leasing in general is for brand new cars. Used leasing is for used cars. Now, when companies refer to used car leasing, they don't mean old cars. It can vary from company to company, but generally used car leasing deals are for cars no older than three years old.

Although, used car finance is usually offered for pre-reg cars (cars registered by a dealership in order to make sales targets but not actually sold to customers) and ex-demo cars (cars used by dealerships for things like test-drives for potential customers).

Used car leasing - is it any cheaper than regular leasing?

Typically, used car leasing tends to be a bit cheaper over the course of the agreement. But it doesn't necessarily offer the greatest value. Going used in the typical example below works out cheaper by £515.52 over the course of the agreement. Not all that much cheaper considering you're leasing a used car, that may be coming to an end of its manufacturer's warranty. The three-year old Fiat below for instance, only has a three-year warranty.

Newer used cars tend to have a similar monthly payment to new cars, but a slightly cheaper initial payment.

Lineup of Fiat 500s

Below are typical examples: these can vary highly depending on what deals can be found.

Typical three-year old Fiat 500 48-month lease deal

Monthly cost: £95.42 (47 payments, incl. VAT)
Initial payment: £858.75 (plus £39.99 processing fee)
Mileage allowance: 5,000 miles per year
Total cost: (excluding excess mileage charges and any end of contract charges): £5,383.48

Typical new Fiat 500 48-month lease deal

Monthly cost: £100 (47 payments, incl. VAT)
Initial payment: £1,000 (plus £199 processing fee)
Mileage allowance: 8,000 miles per year
Total cost: (excluding excess mileage charges and any end of contract charges): £5,899


Used car leasing deals are few and far between

From a customer perspective, used car leasing is often cheaper, but rarely offers better value for money. The reason for this: the huge constraints on leasing businesses offering used cars. For example, the business needs to find a steady stream of used cars in good shape, a problem not found when leasing new cars.

Generally, high-end cars are the best value to lease because of depreciation. But even with leasing, high value cars are for the few, not the many.

Car finance deals:

Used car leasing with no deposit 

Technically, when you lease a car, you pay an initial payment, not a deposit. This technicality is important because unlike with a deposit, you don't get an initial payment back.

Used car leasing with no initial payment is a real-niche busting exercise. Not many companies offer this service, but there are a few out there. Generally these work out as more expensive than regular used car leasing services.

This is because an initial rental helps reduce the value of your monthly payments. The more money you put upfront, the less you pay each month.

Paying an initial rental also makes you more likely to be accepted if you have bad credit too. This is because the finance company essentially lends you less money, so you're less risk.

Find out more about leasing with no deposit

Used car leasing pros

>> Generally cheaper than new car leasing
>> Can be easier to get if you have a bad credit rating

Used car leasing cons

>> Rarely better value than new car leasing
>> Fewer cars on offer

Further reading

>> How does car leasing work?
>> Lease or buy a car: rent or keep?
>> Best hybrid cars to lease
>> Best electric cars to lease