Car lease terms vary, just like auto loan terms. Car lease terms are relatively short, typically lasting either two or three years, while auto loan terms stretch beyond five years on average. If you have poor credit, you may not be eligible for a lease, or you may need to stretch the lease term longer to make your payment affordable.
Keeping Car Lease Terms Short
Lease terms can be either short or long. A short-term lease is one that lasts between 12 and 24 months. The most common lease terms are between 24 and 36 months. Leases are considered to be long-term when they stretch over 36 months, and can be as much as 60 months (five years). In all honesty, if you plan on leasing a car for longer than 36 months, or need a longer term just to make the monthly payment affordable, you should probably buy a vehicle rather than lease one.
When leasing, you only pay for the portion of the car you use, and you want everything to remain under warranty while you do. This eliminates the need to pay for major repair costs, which can be especially hard to justify when you’re turning the vehicle back in to the dealership. No one wants to pour money into a car they're never going to own.
At the End of a Lease Term
When your lease is finished, you're left with a few options as to what to do with the vehicle:
- Walk away – This involves returning your leased car to the dealership. If you're at or under your mileage cap, and there's no more than normal wear and tear on the vehicle, you should be able to do this without having to pay more than the disposition fee. If you're looking to end your lease early, you may have an early termination fee to think about, and you typically have to pay any remaining payments even though you're not keeping the car.
- Buyout the lease – If you like the vehicle and want to keep driving it, you can buyout your lease. If the car is worth more than the buyout amount, you can even come out ahead by purchasing the vehicle and selling it for a profit.
- Lease another car – If leasing is the right fit for you, you can often save yourself paying the disposition fee by leasing another vehicle from the same leasing company.
Leasing a car can be nice because you get a new vehicle every few years, and the monthly payment can be much lower than if you were to finance the same car. However, there are a lot of costs involved in a lease that make the overall cost higher than just the monthly payment.
Choosing to Buy Rather than Lease
Now that you know leasing may not be the best idea for every situation, you should know that there are many options available for auto financing, even if you have bad credit.
If credit has been standing in your way, Auto Credit Express wants to help connect you with a dealership that can get you the vehicle you need. We'll work to connect you with a special finance dealer near you if you fill out our easy and free auto loan request form. Get started today!
