Is a short-term car lease ever a good idea?

Couple sitting in the car, on a road tripImage: Couple sitting in the car, on a road trip

In a Nutshell

A short-term car lease isn’t for everyone. It can come with high monthly payments — and your only option may be a lease takeover, which binds you to the original lessee’s loan terms. But if you like to drive new cars or temporarily need a certain type of vehicle, it could be the right solution for you.
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If you can’t resist the allure of a shiny new car or simply don’t want to be tied to a car contract for more than a couple years, a short-term car lease might be worth exploring.

Short-term car leasing is exactly what it sounds like — a lease agreement for a relatively short period of time.

Short-term leases can offer some advantages, like being able to drive a brand-new car with less of a commitment — but there are a few big drawbacks, too. Let’s take a look at what a short-term lease is, and the potential pros and cons.

What is a short-term car lease?

When you lease a vehicle, you agree to use the car for a specific number of months and miles. After the lease ends, you must return the car to the dealership or, if the option is available, buy it.

There’s no official guideline for what length of car lease is “short” term — some auto industry experts consider any lease 24 months or less short term. Others define it as less than 36 months. Leasing terms at dealerships typically range from 24 to 60 months.

Fast Facts

Short-term car lease or long-term car rental — what’s the difference?

Some car rental companies allow monthly rentals for longer periods of time that might compare to a short-term lease. One of the biggest differences is the financial commitment.

A car rental may allow for early cancelation, and if there are cancelation fees, it’s possible they could be minimized if you give a certain amount of notice (24 hours is the rule for some agencies, but it varies). On the other hand, short-term leases have set start and end dates, and charges for ending a lease early can be high, according to the Consumer Financial Protection Bureau. Simply giving the car back and stopping payments is not an option.

The process of getting a rental car versus a lease is also a lot simpler, from a financial standpoint. Typically, you can rent a car if you have a credit card (or sometimes even just a debit card). With a lease, the process involves a review of your credit.

Drawbacks of short-term car leases

Before you jump into a short-term car lease, consider these potential negatives.


If you lease a brand new car, depreciation can take a big bite out of your wallet. Here’s why: The car’s estimated depreciation is built into your lease payments. And cars lose the most value — usually around 20% — during the first year on the road. If you’re leasing during that period, you’re picking up the bill for that depreciation — and with a short-term lease you’re spreading it across a smaller number of payments.

Taxes and fees

Many states charge sales taxes, which you may need to pay on a car lease. In addition, you might need to pay title, registration and inspection fees, along with potential county or municipal sales taxes. Depending on the state and area you live in, these taxes and fees could add thousands of dollars to the cost of a short-term lease. Be sure to do some research and understand all of the potential costs before you sign a lease contract.

Mileage limits

If you get a shorter-term lease through a dealership, you can generally get 10,000 to 15,000 miles per year. But if you take over someone else’s lease, you might have fewer miles to use.

As with longer leases, if you exceed the agreed-on mileage, you could end up owing more. Standard mileage penalties range from 15 to 25 cents a mile.

Possible advantages of short-term car leases

A short-term car lease can be an attractive option if …

You want to drive the latest and greatest

Addicted to that new-car smell? A shorter-term new car lease means your lease will be up not long after that smell wears off, freeing you up to lease another new car.

You need temporary wheels

If you only need a car for a little while, a short-term lease might be a good option. Maybe you’re relocating for your job for a year and your new commute would benefit from a more fuel-efficient vehicle. A short-term lease could work if you need a car that fits your situation for a couple years or so — or less.

Where can you get a short-term car lease?

You have two main options for getting a short-term lease.

Head to a car dealership

If you’re looking for a term of 24 months, many car dealerships offer this option. Just be aware that this might be the shortest term available, and you might not be able to get such a short term at all dealerships.  Lease programs at dealerships vary by location but generally range from 24 to 60 months.

Take over someone else’s car lease

Sites like or can put you in touch with drivers who want to exit their lease contracts early. If you’re looking for a term shorter than 24 months, you might find some options this way. It’s important to note that both of these sites require a credit check to be eligible to take over a lease, and so applying may generate a hard inquiry and lower your credit score.

As you research your lease takeover options for each car, be sure to note the monthly payment the original lessee had, because you’ll be inheriting it. Pay attention to all the terms, including the remaining miles on the lease, too — you may be left with fewer miles than you need. When you take over someone else’s car lease, you are responsible for all of the obligations included in the lease, so review everything carefully before jumping in.

Bottom line

Short-term car leasing can be an option if you don’t want to commit to one car for a long time — and if you don’t mind paying for that flexibility.

If you aren’t sure whether a short-term lease is right for you, compare the costs associated with those of other options such as a short-term rental or even purchasing a new or used vehicle. Doing all your homework to understand the potential benefits and drawbacks of a short-term car lease will help you decide which route may be right for you.

About the author: Dana Dratch is a personal finance writer (and coffee fanatic). She covers credit, money and lifestyle issues. Read more.