Should You Rent a Car or Sign a Short-Term Car Lease?Should You Rent a Car or Sign a Short-Term Car Lease?
If you’re looking for car lending options for a year or less, then signing a lease or choosing a long-term rental may be your two best options. Both options have pros and cons, so consider both carefully along with your personal circumstances before you settle on one or the other. Let’s dive into the reasons to rent a car or lease a car.
Requirements: What You’ll Need to Lease or Rent
One main difference between leasing and renting a car lies in what you’ll need to provide upfront. In general, a car dealership offering a car lease, either short-term or long-term, has more stringent requirements than a car rental company providing a long-term rental service.
Let’s look at the specifics.
What Do I Need to Lease a Car?
An acceptable credit score (670+)
Proof of auto insurance
Proof of income/ability to pay
Some lessees also might have to provide a cosigner. A cosigner is another person who agrees to pay the lease if the primary person cannot make a payment. A cosigner typically has a better credit score, a more established credit history, or a more stable income. All of those criteria indicate that the cosigner will be able to cover the payments if necessary.
What Do I Need to Rent a Car?
A clean driving record
The requirements for car rental are simple. In the case of a long-term car rental, the credit card proves your ability to pay. Also notice that there is no auto insurance requirement. The rental company has insurance on every vehicle in their fleet. Renters can pay for a loss damage waiver that limits a driver’s liability if the car is involved in a crash during the rental period, but that service is usually optional.
Can You Lease a Car with Bad Credit?
Maybe. Car dealers definitely prefer their lessees to have good credit. Why? Car dealerships typically only lease brand-new vehicles. Because they are fresh off the assembly line, these cars are in pristine condition and haven’t lost any of their value. Dealerships want to protect the value of these vehicles, so they will only lease to drivers who appear financially stable.
If you don’t have good credit, a dealership offering you a lease will probably put additional restraints into the contract, such as:
Requiring a cosigner
Requesting a larger down payment
Increasing the price of monthly payments
No Credit Check Car Rental
To rent a car, no matter how short or long you want it, you don’t need a good credit score. The rental company will not run a credit check on renters who present a credit card when they pick up the vehicle. Simply put, if you have a credit card, they trust you can pay for the rental.
You should know that if you present a debit card instead of a credit card, the rental company will probably run a credit check. The rental company just wants to verify your credit worthiness, which they can’t do with a debit card alone.
Cost of Leasing vs. Renting a Car
A lot of factors go into the pricing for both of these options, making it difficult to compare specific numbers. Let’s look at the factors instead.
The minimum cost to lease a car includes these expenses:
A down payment
Monthly payments for a set period of time, usually 2-4 years
A rental car comes with these costs:
Note that the rental company assumes some of the big costs associated with driving when you choose to rent: they cover the primary insurance on the car and any needed maintenance.
If you would like to see what it would cost you to rent, submit the dates for the borrowing period you’re considering in the form above. Once you submit the form, you’ll see a page with vehicle options and their rates.
The total price of a rental versus a lease depends on how long you drive the car, which leads right to our next question.
How Long Can You Rent or Lease a Car?
A car lease usually lasts between 2 and 4 years, which means 24-48 payments. Because a lease locks you into making those payments for several years, the overall cost is predetermined.
On the other hand, a long-term car rental is more like a month-to-month agreement. The total price goes up only if you choose to keep renting. You pick the start and end dates, and most rental companies are happy to help you extend your rental period. Avis allows long-term rental for up to 11 months.
Can you get a short-term car lease?
Most car dealers don’t offer short leases, meaning if you want a car for less than two years, monthly car rental may be your best option. To understand why, you need to know how both the dealer and the driver benefit in a typical lease.
In any lease, the person leasing the car pays the estimated amount the car will depreciate during the leasing period. This transaction saves the driver money because it’s cheaper than buying a car. Similarly, it saves the dealership money because they aren’t losing money while the car loses value.
A lease becomes less appealing to both parties when the terms of the lease are shorter. For the driver, the monthly payments go up because a car’s biggest drop in value occurs during its first year on the road. For the dealer, finding drivers who want to pay more per month for a lease is harder, so they usually just avoid offering 6-month or 1-year car lease options.
Should I Lease, Rent, or Buy a Car?
Taking all the factors into account, there are good times to use all these options.
WHEN TO LEASE
It can be a good idea to lease a car if you have solid credit and know you’ll want the car for 2-4 years—but not any longer.
WHEN TO RENT
A monthly car rental is a better option than leasing if you have a lower credit score or need a car for a year or less. You can’t lease a car for a month, but it’s no problem to rent a car for a month.
You should also consider renting if you aren’t sure what type of car you want. Avis, for example, lets longer-term renters switch vehicles periodically, making this a great way to take some extended test drives before you settle on a specific car.
If you plan to rent a car for a month or more, submit your rental dates in the form above to browse your car options and make a reservation.
When to Buy
If you want to make a car permanently yours because you’ll need it for three or more years, buying is probably your best bet. But choosing to buy doesn’t have to mean a high price tag or fewer cool features. Used rental cars are almost always models from the last few years but at much lower prices than you find on dealer lots.
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