How Does Long-Term Car Rental Compare to a Short-Term Lease?

Cost of Leasing Compared to Renting a Car

The final dollar amount is the paramount concern on most people’s minds when they’re about to take home a new car. After all, transportation is one of the biggest expense categories in any budget. 

If you just compare a payment on a monthly lease to the rate of a monthly car rental, the numbers may look pretty similar. But let’s look deeper. What exactly goes into each of those figures? And what costs do you have to pay that aren’t part of that monthly fee?

Fees and Costs to Lease a Car

A lease typically includes additional fees written into the contract, such as:

• Office administration/paperwork

• Interest

• Taxes

There are also some one-time costs associated with a lease:

• Vehicle registration

• Down payment

• Security deposit

Plus, the driver has to assume some of the costs of daily use, including:

• Auto insurance premiums

• Maintenance and repairs

• Gas

And finally, the driver may face additional fees at the end of the lease:

• Mileage fees charged for exceeding the yearly limit

• Wear and tear fees

• Auction fees

Even without raw numbers to look at, it’s clear that these fees can add up—and you don’t even own the car when the bill is paid in full.

Fees and Costs of Renting a Car

The list of expenses on a long-term rental is much shorter:

• The rental payments

• A small security deposit

• Any additional services or products the driver requests, such as e-tolls or satellite radio

• Gas

• Sales tax

The rental company takes care of the bigger expenses like auto insurance, vehicle registration, and maintenance. Plus, car rental companies usually give a good deal to renters who are taking the car for more than a few days. In most cases, the daily rate goes down the longer you rent. To investigate the cost of a rental, submit some rental dates in the form above, and you’ll see what car options are available and their rates.

Short-Term Car Lease vs. Long-Term Car Rental

Most people only associate renting a car with very short periods of time, like a long weekend or a quick vacation. If you’re already thinking about a lease, you may assume a long-term car rental won’t work in your situation. 

Think again! A long-term car rental is an easy-to-find alternative to a short-term lease. 

See for yourself:

Why are short-term auto leases so rare?

Car dealerships don’t offer many short-term leases for one simple reason: they are more expensive for the driver and therefore harder to sell to consumers. 

A car lease works because it’s a win-win for the dealership and the driver. The dealer has room for new cars on the lot and recoups the cost of depreciation. The driver gets to use a new car for less than the cost of buying, and the 2-4 year time frame spreads the depreciation costs over several years so the driver ends up with reasonable monthly payments.

Because cars lose most of their value in the first year on the road, a short-term lease is much more expensive per month than a longer lease. 

Requirements to Lease a Car

If you want to lease a car, it’s not as simple as just showing up at a dealership and picking out your favorite model. Getting a lease is actually more like getting a car loan than renting a car.

 To lease a car, you’ll need all of the following:

• A current driver’s license: The dealer needs to verify your identity and know you are authorized to drive.

• A good credit score: The dealer wants to know you have a history of making payments in full and on time.

• Auto insurance: The dealer wants to know their property (the car) is protected in case anything happens while you’re leasing it.

• Proof of income: The dealer wants to know you have a source of income so you can make payments. 

If you don’t have all of those credentials, you may be ineligible to lease a car, or you may have to bring a cosigner with you. A cosigner also puts their name on the loan and agrees to make the payments if you don’t. 

Requirements to Rent

In contrast, renting a car is pretty simple. Here’s what you need:

• A valid driver’s license

• A credit card or debit card

Those are the main requirements to rent a car, even for a month or longer. 

Wondering about a credit check? To pick up a car rental without a credit check, share your credit card. If you share a debit card instead, the rental company will want to ensure you’re financially secure enough to cover the car if something happens to it, so they will run a credit check. 

Can I Get Out of a Car Lease?

You might be able to end your lease early, but you’ll probably run into high fees for ending the contract early. In some cases, you may even have to pay almost the full remaining balance, which basically nullifies the benefits of getting out of the lease. 

If you want to get out of a lease, you have a few options:

• Return the car to the dealer and take the penalties.

• Transfer the lease to another driver (similar to subletting a property). Your name probably stays on the lease, though, so you’ll still be responsible for making sure it’s paid in full.

• Sell the car and pay off the lease. You may have to come up with extra cash if the car sells for less than the remaining amount of the lease.

As you can see, it is hard to end a lease early.

Enjoy Flexible Contracts with Long-Term Rental

Leasing just can’t compare to the flexibility of a long-term car rental. You’re only responsible for the rental fees, and you can decide to extend or say goodbye to the car month to month. If your reason for needing a car might change before a lease comes to an end, a monthly car rental is probably the best choice.

What’s Best for You: Leasing or Renting a Car?

No one knows your situation like you, but hopefully this information helps point you in the direction that suits your needs. A lease works well for people who know what kind of car they want to drive and feel confident they’ll be happy driving it for a few years. A long-term car rental is ideal if you’re not ready for the full commitment of a lease, need a car for a shorter time frame, or have a smaller budget.

If you’ve settled on a long-term rental, book with Budget today. We have cheap monthly car rentals that can solve your transportation problem in a snap.Submit your rental dates in the form above to start your reservation.