Millions of leased vehicles are turned in each year, providing used-car shoppers with opportunities to snag deals on off-lease vehicles. There are great deals available for car shoppers on these vehicles, but you have to know where to look for them.
About Off-lease Vehicles
So-called off-lease vehicles may look like other used cars, and for all intents and purposes, they are. But they also represent inventory manufacturers must move. Otherwise, dealer lots fill to overflowing and prices plunge. Low prices can hammer manufacturer profits, and that’s never a good thing.
This represents an opportunity for car shoppers. Such off-lease models are typically resold as certified pre-owned (CPO) vehicles. The CPO designation means they have undergone extensive multi-point inspection and reconditioning to bring them to like-new condition.
CPO vehicles are usually no more than six years old, and there are also mileage limits. Toyota, for example, doesn’t include cars with more than 85,000 miles on the odometer in its program. Many CPO vehicles are also required to have a CARFAX Vehicle History Report.
Let’s Make a Deal
As with any used vehicle, you can negotiate a deal on a CPO car. Manufacturers may tout special incentives, but you’re free to counter with your offer. That said, it is important to understand how manufacturers sweeten CPO deals before you begin negotiating. Usually, you’ll find the following incentives:
Most manufacturers honor the original warranties, including bumper-to-bumper, powertrain and corrosion. The last two are typically are in place for five years or more, while new bumper-to-bumper warranties often end after three or four years.
If you visit the manufacturer’s website looking for CPO offers, you may find that these cars come with extended manufacturer warranties. Volvo, for instance, extends its powertrain warranty to 100,000 miles from 50,000 miles for its CPO fleet. Similarly, Nissan extends its 60,000-mile powertrain warranty to 100,000 miles.
But the warranty enhancements rarely stop there. For example, Volkswagen extends its comprehensive warranty by two years or 24,000 miles, whichever comes first. Volkswagen also kicks in two-year roadside assistance and provides a three-month satellite radio trial subscription.
2. Financing Deals
Manufacturers often add financing offers to help move inventory. These change regularly, usually every month, and may cover entire CPO inventories or select models.
These rates are often several points lower than what most banks and some credit unions offer, and are reserved for customers with top credit. You should know that if you’re not eligible for promotional financing, a loan at a higher rate may still be available.
In rare cases, manufacturers may offer a cash incentive, just as they do for new cars.
3. Leasing Options
Can you lease an off-lease vehicle? Yes, you can! Unlike financing deals, it can be more challenging to find a lease offer from a manufacturer. Brands such as Acura, BMW, Mercedes-Benz, Porsche, Toyota, and Volkswagen have offered them, but many others do not.
That said, you can usually arrange a lease with your dealer with that lease backed by the manufacturer’s captive financing arm, such as Ford Credit or Toyota Financial. Not all dealers handle used car leases, so the best way to determine if they do is to call the dealer and ask if they arrange leases on CPO vehicles.
Connect with the dealer’s financing department as they’ll give you the correct answer. If a dealer doesn’t offer a lease, then continue searching. Arranging a lease on a CPO vehicle isn’t as easy as securing financing, but it is possible.
Some CPO warranties come with a deductible. When comparing CPO offers, you should look beyond all the perks and incentives and find out if you’re required to meet a deductible, since this could impact your out-of-pocket costs over the long term. Further, is the coverage transferable if you decide to sell? Another important perk some brands offer is a service loaner vehicle.
Once you have the numbers in front of you, it’s time to determine whether you can afford the deal. For a list of the latest incentives, check out our Used Car Deals page.