Most leases run 36 months. If you only need a car for a year or two, a shorter lease sounds like the obvious answer. It can be, but it usually costs more per month, and it helps to know why before you sign.

Why short leases cost more per month

A lease charges you for the value the car loses while you have it. See how lease payments are calculated for the full formula.

The catch is that depreciation is not spread evenly. A new car loses value fastest at the start. A 24 month lease covers those steep early months and spreads them over fewer payments. A 36 month lease covers the same steep months plus a gentler third year, spread over more payments.

Fixed costs are spread thinner too. The acquisition fee, documentation fee and registration are roughly the same whatever the term, so on a shorter lease each one is a bigger share of each payment.

A rough illustration, for the same car:

  • 36 months: $450 a month
  • 24 months: $510 a month
  • 12 months: far higher, if the lender offers it at all

The exact figures depend on the model's residual values, which the lender sets per term. See residual value explained.

When a short lease still makes sense

The manufacturer is subsidising it. Occasionally a brand sets a strong residual or reduced money factor on a 24 month term, and the payment ends up close to the 36 month one. It happens. Always price both.

You know your life will change. A move, a growing family, a job that may relocate. A shorter commitment can be worth a higher payment.

You like driving something new. Some people simply want a new car every two years and are happy to pay for it.

Cheaper ways to get a car for under two years

Take over someone else's lease. A lease transfer lets you step into an existing lease with 6 to 18 months left. The original lessee absorbed the steep early depreciation, and some offer cash to get out. This is often the cheapest short term option.

A long term rental or subscription. Higher monthly cost, but insurance and maintenance are often included and you can hand it back with little notice. See long term car rental vs lease.

A normal lease with an exit plan. Take a 36 month lease on a car that holds its value well, and plan to transfer it or end it early if you need to. This carries risk, because early exits can be expensive, so only do it on a car that is easy to transfer.

Extend an existing lease. If you already have a leased car and only need a few more months, many lenders allow a short extension. See extending a car lease.

The short version

Short leases cost more per month because you pay for the car's steepest depreciation over fewer payments. They make sense when a manufacturer subsidises the term or when flexibility is worth the premium. For under a year or so, a lease transfer or a rental is usually cheaper.

If you want a 24 and a 36 month quote side by side, send us the car and we will price both.