How Long Should My Car Lease Be?

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - June 6, 2019

Just like auto loans, lease terms vary, and how long your car lease should be depends on your specific situation. Car leases are relatively short, and typically last either two or three years. Leasing is a popular option for consumers that want to drive the latest vehicle with an affordable monthly payment, and you could choose to buy it at lease end if you really like it.

Shorter Leases Are Better

Some lessors offer long-term leases, but it’s best to keep it as short as possible. Ideally, you should shoot for a lease with a term of 24 or 36 months. If you need to lease a car for longer than 36 months to make it affordable, you’re probably better off buying it at that point.

Unlike financing, you only pay for the portion of the vehicle you use when you lease, with a payment that includes the money factor (the interest rate in leasing) and depreciation. This generally makes the monthly payment cheaper than when you finance with an auto loan, since you’re not paying for the entire car.

What to Do at the End of the Lease

What happens when your lease is up? You have three options to choose from when deciding what you want to do with the vehicle:

  1. Lease again – If you liked your leasing experience and you want to lease again, you may be able to avoid the disposition fee – the fee associated with the end of a lease – by leasing another car from the same leasing company.
  2. Buyout the lease – If you like the vehicle and you don’t want to give it up, you could choose to buy it by either paying cash or refinancing the lease.
  3. Walk away – If you didn’t like your leasing experience, you want to buy your next car, or you want to lease from another company, you can just return the vehicle and walk away. In this case, you have to pay a disposition fee and possibly additional fees for excess wear and tear and mileage.

If you’re in the middle of a car lease, keep in mind that you typically have to make any remaining payments on top of an early termination fee to get out of it early. So, make sure that once you lease, you plan on keeping the vehicle for the duration of the term.

The Bottom Line

Leasing is great if you want a fresh, new set of wheels every few years without the responsibility of ownership. Unfortunately, car leasing is typically reserved for consumers with good credit, and those dealing with credit issues may find getting approved difficult.

While we can’t help you with leasing, CarsDirect can help you get connected to a dealership that knows how to handle unique credit situations. We’re teamed up with dealers all across the nation that are experts at helping buyers get the auto loan or lease they need. We'll work to match you with a dealership in your area after you submit our online car loan request form. Get started today!

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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