Everything You Must Know About Short Term Car Leases

When a consumer is in need of a vehicle for a short period of time, a short term car lease may be the best way to go. Shert term leases typically only last around a year. These car leases can take on many forms, and aren't as easy to find as a traditional lease, which typically lasts two to three years. Make sure to examine all the options available when considering a short term lease.

What is a Short Term Car Lease?

A short term car lease is a very good option for those who are looking to get into a new a vehicle, but do not want the long term commitment of a 60-month loan. The beauty of a short term car lease is that you may find leases for as little as 6 months to an 18-month term.

If you were to try and apply for a car lease through a traditional leasing company, the average lease term is around 24 to 36 months. You’d be hard-pressed to find an automotive manufacturer’s leasing company that’s willing to lease you a brand-new vehicle for less than 24 months. In addition to the difficulty of finding a short term lease, you’re likely to pay more each month. The shorter your lease, the higher your monthly payment.

Short term car leases are generally a good investment for those who need to have a car for a temporary job, special family needs, visiting relatives, going to school, or having special financial circumstances. This type of lease can be entered into with no down payment, and very low monthly payments if you do it right.

However, this typically means choosing a lease to take over. When you enter into a short term car lease take over, you are not starting a new lease, but rather assuming an existing one.

This means that you are responsible for the remainder of the lease as far as length, payments, and contractual obligations. Because of this, you should take some time to compare the different leases available.

What are the Short Term Lease Considerations?

1. Length of Contract – Due to the short period of time a consumer may need to use a vehicle, many finance companies offer cars that consumers have leased through long-term arrangements that they now wish to terminate. The minimum period for a short-term lease is generally 6 months with the maximum usually being 24 months.
2. Check out the Fees – Often, finance companies will reduce or eliminate certain documents, filing, disposition, and termination fees as an extra incentive when marketing short-term leasing arrangements.
3. Monthly Payments – Monthly payments may be much lower than the original lease arrangement when the vehicle has been leased for at least a year. Since payments are determined by depreciation value, the rate for the first year can be up to 30%. This allows for lease assumption at a reduced vehicle value that can benefit a consumer seeking a short-term deal.
4. No Insurance Needed – Often many fees, such as insurance, have already been satisfied and the assumer of a lease arrangement can realize additional savings.
5. Check Restrictions – Make sure to gain an understanding of any restrictions that carry over from the original lease like operating limitations and excessive mileage charges that may increase the cost of the short term lease.

Where Can You Get Short Term Car Leases?

There are several places you can turn to get into a short-term lease. Some, like buy here pay here dealerships and rental companies may offer rent-to-own options, which are similar to leasing, but ultimately you're purchasing the vehicle.

A lease for a short term however, doesn't necessarily mean you have to buy, and you may find shorter lease term options with some traditional lease companies. Here's a few places you can look for a short-term lease.

BHPH Dealers

If you want a short term car lease, you may have to look into lease to own vehicles from an in-house financing dealership. In-house financing means the dealer handles all the financing themselves, and they can often offer lease-to-own agreements that can be short. However, you’re likely to pay weekly or biweekly payments instead of the usual monthly installments.

Car Rental Companies

There are also some car rental companies that can offer long-term vehicle rentals, and they may even offer discounts the longer you rent the car. Some rental vehicle companies may not check your credit, either, which can be a bonus for borrowers with less than perfect credit. It’s also typical of an in-house financing dealership to skip the credit check, since they don’t need to rely on third-party lenders to approve their buyers.

Traditional Car Dealerships

While you mostly find traditional car leasing at car dealerships, some may offer short-term loans as well. You'll have to research the dealerships in your area to see what's available to you. Don't forget to take into consideration the due at signing requirements, and and mileage restrictions so that you get the best deal you can.

Lease Takeover Platforms

If you plan on taking over a lease, you'll want to look into a lease takeover platform that can help. There are several online options including LeaseTrader, Swapalease.com, and others that can help you find a lease in your area to take over.

How to Compare Short Term Car Leases?

When you'e assuming a short-term lease from someone else, you should compare several leases to see which is best for you, instead of jumping at the first one that comes along. Here are some different things to evaluate when you're comparing leases:

Length of Remaining Lease

The first thing to compare should be how much time is remaining on the existing leases you're considering. Since you are only assuming the lease you will be required to pay for the remainder of the contract. That means if there are 12 months left, you are required to pay the monthly payments for those 12 months. Compare each lease to the length of time they have left.

Remaining Payment Amount

If a lease has 9 months and a $520 monthly payment, is that better than one that has 13 months and a $400 payment? The smaller payment, while for a few more months, will be a help to those who cannot afford a large monthly payment. Of course, this will also depend on the type of vehicle being leased and the estimated value of the car at the time of the original lease.

Special Contractual Responsibilities

Every lease has certain conditions set forth in the contract that can come into play in a short term lease. There are several circumstances that can lead to fees and penalties at the end of the contract. When you assume a short term lease on an existing lease, the original lessee is not held responsible anymore. You are. With this in mind, compare each lease according to these special conditions. Things like mileage allotment, penalties for excessive wear and tear, and any difference in market value are all things to look at.

Buyout Options

When you get to the end of the lease contract, you will usually have the option to buy the vehicle. This is where your initial decision will come into play. After a few years, most cars will depreciate up to 50% of their value. When you only pay on a vehicle for a few months you can potentially buy that vehicle at a great price. Compare where each vehicle is in its value before making a decision on one.

Pros and Cons of Short Term Car Leases

As with any lease, there are pros and cons to consider when you're thinking about getting a short term lease, or assuming someone else's lease for the remainder of their term. Here are some things to consider:

Pros of Short Term Leases

• New Cars – When you get a short term lease you get to drive a new car for that amount of time, just like with regular leases. If you're always in the market for a new ride leasing may be for you.
• Minimum Commitment – A short-term lease could be just what you need if you're having trouble finding the right fit in vehicles. Short term leases give you less time to be tied to a vehicle you may not love.
• Convenience – A short term lease can be convenient if you're not going to be in one particular area for very long, maybe for a year-long job contract, say.

Cons of Short Term Leases

• Higher Payments – Due to the shortened time frame of the lease, monthly payments on short-term leases are typically much higher than on traditional leases, especially since you're paying for depreciation in a lease, and new cars depreciate most in their first year on the road.
• Mileage Concerns – If you drive a lot it can be easy to hit mileage caps quickly, so be sure you know how many miles your lease comes with and if you can buy more at the beginning of your lease term.
• Short-Term Leases are Rare – Traditional leases are much easier to come by, and you may have to search for a dealership that offers short term leases.

If a Short Term Lease Isn't For You

If you don't qualify for a short term lease, or if you can't find a lease right now, it may be time to consider an auto loan. If you're struggling with credit issues, an auto loan isn't out of the question if you know where to look. At CarsDirect, we work with a network of dealerships from coast-to-coast that are signed up with lenders that help many types of borrowers. Let us point you toward your next auto loan by filling out our fast, free car loan request form.