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Used-car leasing has become more popular as the economy worsens. It seems to offer a less expensive way to drive a vehicle than new-car buying or leasing, or even used-car buying. But is it all it seems?

The apparent advantages of used-car leasing are:

* You avoid a brand 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 might have remaining manufacturer’s warranty

When compared with new-car leasing, used-car leasing is more complex. Let’s look at 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 come with 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 the 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?

Not necessarily. It’s 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.

James Tano comes from TX, USA. He has written several articles on Automotive . You may want to check out his other guide on Auto and Car Insurance tips, and Used Cars For Sale guide!