What to know about short-term car leases

A car lease is a type of auto financing that allows you to drive a car, truck or SUV for a predetermined length of time and number of miles. While most leases last three or more years, a short-term car lease allows you to lease a vehicle for 24 months or less. These types of leases are less common but can be a good option if you only need a vehicle for a brief period.

Pros and cons of short-term leases

A short-term car lease has one big benefit: it offers minimal commitment on a vehicle. If you aren’t sure what type of car you want — or if you crave variety — then leasing a car for less than two years may be ideal.

But a short-term lease has a few drawbacks. The monthly price tag on a short-term lease can be much higher than on a standard lease. There are two reasons:

• New cars lose about 20 percent of their original value in the first year: A good portion of your lease payment covers depreciation. The residual value of a vehicle is proportionately less in the short term, which will end up costing you more.
• Shorter terms typically result in higher monthly payments: This is because you are cramming the same cost into two years rather than three or four. Month-to-month, that means you pay more — and you still pay sales taxes and fees in many states.

For new leases, the most common terms were 35 or 36 months, according to data from Experian. The fact that short-term leases are uncommon can be another drawback. You will need to scour dealerships and negotiate to find lease options for less than three years.

How to get a short-term car lease

Although short-term leases are not common, the process of getting one is functionally the same as a standard lease.

1. Research your options: Find a dealer that offers short-term leases or is willing to negotiate. And, of course, find a dealer that has the type of vehicle you want to drive.
2. Negotiate the lease contract: On top of ensuring a short term, negotiate common costs like the disposition fee, mileage allowance and sale price.
3. Compare offers: If you are able to find multiple short-term lease deals, compare them closely. Monthly payment and end-of-lease fees will all impact total cost.

Most importantly, avoid common leasing mistakes. Always know how much your monthly payment will cost, and be prepared to negotiate and estimate how much you will drive when you enter into a short-term lease.

Alternatives to short-term auto leases

While you can certainly negotiate a short-term lease with a dealership, there are other ways to drive a car for less than three years.

1. Take over someone else’s lease

Most auto manufacturers will allow another person to take over a car lease from the original lessee who wants out of their contract.

While this can be done between two individuals, it may be easier to use a third party, such as SwapALease or LeaseTrader. These services specialize in pairing current lessees with those looking for a short-term car lease. You may also have more luck finding someone depending on your state — Michigan, New York and New Jersey were the states with the most leases at the end of 2023, according to data from Experian.

Getting a short-term lease through a lease transfer allows you to avoid making a down payment. In addition, your monthly lease payment would be the rate that the original lessee negotiated for when they started their lease term. This can save you a lot of hassle, although you won’t be able to renegotiate any less favorable terms, like wear-and-tear fees and mileage overage charges.

2. Exit a standard lease early

If you can’t find a suitable short-term lease, you may consider a standard term that you end early.

You can use the third party services discussed above to hand your lease off to a new lessee. However, you need to be sure your lessor allows this from the get-go — it won’t matter if you can find someone if it violates the terms of your lease.

Your other option will be to walk away from the lease. But beware: You’ll likely face an early lease termination fee in addition to any other fees that come into play at the end of a lease contract. This can quickly add up, making ending early significantly more expensive than sticking it out for another year.

3. Get a long-term rental

Many rental car companies offer long-term rentals, which are effectively short-term leases and are sometimes called “mini leases.” They offer certain advantages:

• Flexibility: Because these are car rentals and not leases, you’re not locked into a contract and can return the vehicle at any time.
• No mileage limits — most of the time: Unlike when you lease a vehicle, there are usually no mileage restrictions when you opt for a long-term rental. But this may not always be the case, especially when it comes to specialty vehicles.
• Change cars at will: Car rental companies often allow renters to switch cars during the term, giving you the opportunity to drive more than one vehicle.

On the downside, while the rates are lower than a normal car rental rate for a few days or a week, long-term car rentals are still typically more expensive than a lease takeover.

The bottom line

A short-term car lease can be an attractive option if you don’t want to commit to one type of vehicle for a lengthy period or you need a vehicle temporarily.

But shorter terms often come with higher prices. Before deciding on a short-term car lease, shop around at multiple dealers to find the most competitive contract and compare costs with long-term rental options as well.