How Long Are Car Leases?

How long is a typical car lease?

Types of car leases 

Closed-end lease

Open-end lease 

Short-term car lease

Pros and cons of leasing a car 

Lower monthly payments. When you buy a new or used vehicle with financing, you pay the entire purchase price over the life of financing, plus an interest rate—meaning your car payment can get pretty hefty. But lease payments are calculated a little bit differently! Instead of paying for the entire value of the car, your monthly payments only cover the vehicle’s depreciation over the lease term (plus rent and sales taxes). 
Smaller down payments. Car buying generally requires
significant down payments
—up to 20% of the vehicle’s purchase price. Leasing, however, requires very little money upfront. Typically, you’ll need to pay the first month’s payment, sales taxes, title fees, registration fees, and perhaps an acquisition fee when you sign the lease, but this adds up to less than what it costs to begin a car loan. 
Lower repair costs. Because loan terms are relatively short, most necessary
car repairs
will still be covered under your vehicle’s bumper-to-bumper warranty. Plus, depending on your lease terms, the manufacturer may even cover maintenance costs. 
You can avoid the hassle of selling or trading in your vehicle. If you opt for the traditional closed-end lease, you can simply drop off your used car and walk away at the end of your lease term.
You can get a brand-new car every few years. Most people can't afford to
buy a new car
every 36 months is likely out of most people’s price range. However, leasing is an affordable and reasonable way to ensure you always have access to the newest cars with the latest technology and safety standards. 
More cars to choose from. Depending on your credit score and general finances, you may struggle to find a lender willing to finance the vehicle of your dreams. Leasing typically comes with lower monthly payments, however—meaning you can afford to consider more expensive vehicles with higher trim levels.
You can choose to buy the vehicle at the end of the lease. If you fall in love with your vehicle and don’t want to turn it in—don’t worry. Buyout terms are predetermined in your lease contract. 

Mileage limits. Lease terms limit the number of miles you can drive your vehicle each year to keep
excess wear and tear
to a minimum. If you drive a lot, you can opt for extra annual mileage, but it will cost you.
Higher insurance costs. Most leasing companies require higher levels of insurance coverage on leased vehicles, which can make your insurance premiums much higher than they would be if you purchased the vehicle instead.
Requires good credit. If you have bad credit, you’ll likely struggle to secure any sort of lease. Auto loans for people with no or bad credit are harder to find, but still out there—especially if you shop for an affordable used car.
No equity. If you finance a vehicle, you have equity as soon as your vehicle is worth more than the remaining amount of money you owe. When leasing, you are simply paying to use a vehicle—you never gain ownership of it during the normal lease term. This also means you won’t have a
trade-in
should you choose to buy a new vehicle when your lease term is up. 
Hard to cancel. Leases are difficult to terminate before the end of the lease contract, so if you end up hating your car—or if your life circumstances change—you could face hefty disposition fees and other surprise costs just to get rid of the vehicle. 

How to find cheap car insurance for your leased vehicle

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