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What do you do when you need a car for a few months and don't want to commit to buying a car or signing a lengthy lease agreement? A short-term auto lease of less than 24 months could solve your temporary transportation needs, but such leases are harder to find and usually have higher monthly payments than longer leases. Here's what to consider when deciding if a short-term auto lease makes financial sense.
What Is a Short-Term Lease?
Short-term auto leases last for less than two years, while standard auto leases generally have 24-, 36- or 48-month terms. You might choose a short-term auto lease if you need a car temporarily. For example:
- You're away at school and need a car during the term.
- Your employer sends you on a short-term assignment across the country.
- You're considering buying a car and want to give it an extended test drive.
Other than their shorter duration, short-term auto leases work like any auto lease. You sign a contract with an auto dealership or leasing company and make monthly payments in return for use of the car. You're typically responsible for maintenance on the vehicle and must stay under annual mileage limits or pay a fee for extra miles when the lease ends. When the lease term is over, you don't own the car, although you may have an option to buy it. Generally, you'll either return the vehicle or trade it in toward a new lease or purchase.
Learn more >> How to Use the Equity at the End of Your Car Lease
Pros and Cons of Short-Term Car Leases
Short-term auto leases have both benefits and drawbacks to consider.
Pros
- Helps you make a smart purchase decision: You can use a short-term auto lease to test drive a potential purchase for an extended time, giving you a chance to make sure the car really fits your needs.
- Always able to drive a new car: Are you a car aficionado who always wants the latest bells and whistles? A short-term auto lease can ensure you always have access to a vehicle with cutting-edge technology.
- May not need a down payment: Many auto leases require no down payment or a low down payment.
- No lengthy commitment: If you don't want to be tied down to a vehicle or only need a car for a temporary situation, a short-term car lease can be the ideal solution.
Cons
- Shorter leases can be difficult to find: Short-term leases aren't as widely available as standard auto leases with 24- to 48-month terms. You'll likely have to do some digging and contact several dealerships or leasing companies to find short-term leasing options near you.
- May have higher monthly payments: In general, longer lease terms translate to lower monthly payments—so the shorter your lease, the higher the monthly payments are likely to be.
- More car insurance required: Leasing companies typically require comprehensive coverage, collision coverage and gap insurance on leased cars. Maintaining the necessary insurance adds to your costs.
- Fees can add up: Auto leasing companies may charge a variety of fees, including acquisition fees, disposition fees and sales tax, when you lease a car. You might also face fees for exceeding your mileage limits or excess wear and tear to the car.
How to Get a Short-Term Car Lease
Still interested in a short-term auto lease? Here's what to do.
- Decide which kind of car you want. Cars that hold their value well tend to be best bets for leasing. Research vehicles online and test drive a few. Also assess how long you want the car and what type of mileage limit will work for you.
- Check your credit report and credit score. Make sure your credit report is current and accurate. If your credit score could use some work, pay down credit card debt and pay all your bills on time to help improve it.
- Apply for a lease. Dealerships offering short-term leases can be tough to find, although they do exist. If you can't find the lease term you want from a dealership or leasing company, taking over someone else's lease offers a way to lease a vehicle for six months, three months or even less. Websites such as LeaseTrader and Swapalease.com list vehicles whose lessees want to get out of their leases early. Search for the vehicle and lease term you want. The leasing company will check your credit score, income and other factors to ensure you can handle the payments.
- Sign your lease agreement. Be sure to read the agreement carefully and make sure you understand your responsibilities before signing.
Alternatives to Short-Term Car Leases
Leasing isn't the only option when you need a car for less than 24 months. Here are some alternatives to consider.
Long-Term Car Rental
Many car rental companies, including Avis, Budget, Enterprise and Hertz, offer long-term rentals at discounted prices compared to daily rentals. For example, Budget has long-term rentals ranging from one to 11 months, with the option to add months as needed. Long-term auto rental plans often include preventive maintenance and auto insurance options. They generally don't have the mileage limits or upfront fees that short-term auto leases do.
Car Subscription Service
Touting their flexibility and convenience, car subscription services such as FINN, Flexcar, Hyundai Evolve, Porsche Drive and Sixt typically give you the option to drive any vehicle on a month-to-month basis in return for your subscription fee. Car subscription services may cover maintenance, wear and tear, and insurance and even offer 24/7 roadside assistance.
Plan for a Lease Trade
A riskier option is to sign a 24-month auto lease and use a lease trade to transfer the lease to another party before the term is up. However, there's no guarantee you'll find someone to take over the lease, which could leave you torn between keeping a car you don't want and paying an early termination fee to end the lease.
If you're OK with that gamble, check to make sure the dealership or leasing company's agreement allows lease trading (not all do). Clarify the requirements for making a trade, such as being current on your payments, having a certain amount of time left on the lease or paying lease transfer fees. Finally, ask whether the lessor will hold you responsible if the new lessee doesn't make their payments—some companies do.
Whether you opt for a lease, a car subscription service or a long-term auto rental, be sure you understand your obligations as a lessee. These may include carrying a certain amount of auto insurance, as well as paying for maintenance, damages or wear and tear. Also clarify any mileage restrictions, fees due upfront or upon ending your contract, and requirements for canceling or exiting the lease early.
Get Better Lease Terms With Good Credit
You'll typically need good credit or better to qualify for an auto lease. In the third quarter of 2024, the average credit score for an individual getting a new auto lease was 752, according to Experian's State of the Automotive Finance Market report.
Before exploring short-term auto lease options, it's a good idea to check your credit report and credit score, which you can do for free with Experian. Reviewing your Experian credit report can uncover factors affecting your credit and ways to improve your credit score.