Which should you choose? – Forbes Advisor
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If you only need access to a vehicle for a limited time, buying a car or signing a traditional lease may be overkill. Instead, you might consider short-term car rental or long-term rental which offer more flexible alternatives at lower cost and with less commitment.
Here’s what you need to know about short-term versus long-term car rentals so you can make the best decision for your needs as a driver.
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Leasing or renting a car
Leasing and renting will provide access to a car without having to go through the buying process. The main differences between the two are where you will get the vehicle, how long you will have it, and how car insurance will cover you.
Dealerships and leasing companies offer car leases, and they usually last two to five years, although short-term leases are available in some cases. Keep in mind that even if you don’t own the vehicle, you will need to purchase auto insurance that includes both collision and comprehensive coverage, which will likely be more expensive than minimal liability insurance.
Car rental companies offer rentals. You can choose to rent a car between one day and several months. If you already have auto insurance, it will likely cover the rental vehicle. However, if you do not have insurance or would prefer additional coverage, you can also purchase rental insurance from the company you are renting from.
What is a short term car rental?
A short-term car lease typically lasts up to two years, less than the usual two to five years for traditional leases. Because of the shorter terms, you’ll likely end up with higher car payments compared to what you’d pay on a longer-term lease.
If you apply for a short-term car rental, the dealership or leasing company will check your credit to determine the type of vehicle you can access and your interest rate. In general, the higher your credit score, the better your rate will be. Some companies offer leases to drivers with bad credit, but these usually come with higher interest rates and may require a down payment.
Keep in mind that car rental contracts can come with several fees that will increase your overall cost, such as acquisition fees, security deposit and disposal fees as well as registration fees and of title. Leases also come with mileage limits which will limit the number of miles you can put on the car without incurring additional costs, usually 12,000 or 15,000 miles per year.
What is a long term car rental?
A long-term car rental allows you to rent a car for several weeks or months. Unlike a car lease, a rental does not require a credit check. Instead, you’ll need to provide your driver’s license and an accepted credit or debit card, and you usually need to be at least 25 years old.
In many cases, rental companies offer a lower rate on a long-term rental compared to a short-term rental, and they sometimes also offer unlimited mileage. Plus, you won’t have to worry about regular rental charges, though you’ll usually have to pay other charges, such as rental and local taxes, early return fees, late return fees, and refueling costs. You will also have the option of adding additional insurance coverage.
Some car rental companies even allow drivers to swap vehicles for another model during the rental period, making a long-term rental a more flexible option than a short-term lease.
Advantages and disadvantages of a short term car rental
If you’re considering a short-term car rental, here are some pros and cons to keep in mind:
Advantages of a short term car rental
- Can be cheaper: In many cases, the monthly payments for a car lease are lower than what you would pay with a long-term lease, even if the lease is short-term. You can use our car lease calculator to see what a short-term lease could cost you.
- May not require a deposit: There is usually no need to deposit money (usually referred to as capitalized cost reduction) for a car lease. However, you may need to provide a down payment if you have bad credit.
- Wider selection: If you are renting through a dealer, you will have the choice between a wide choice of makes and models.
Disadvantages of a short term car rental
- Harder to find: Most dealerships and leasing companies do not offer short-term leases, which makes them more difficult to locate compared to traditional longer-term leases.
- Fewer options for bad credit: You will generally need good credit to qualify for a car lease – a credit score usually of 670 or higher. Although some companies offer leases to drivers with low scores, these usually come with higher interest rates and may require a down payment. Bad credit could also limit the types of vehicles you can rent.
- Mileage limits: Car leases usually limit you to 12,000 or 15,000 miles per year.
Advantages and disadvantages of a long-term car rental
Here are some pros and cons to consider before renting a car long term:
Advantages of a long-term car rental
- Credit check not required: Unlike a lease, a car rental does not require a credit check. Instead, you must provide your driver’s license and an accepted credit or debit card.
- May not have mileage limit: Depending on the rental company, you may be able to rent a car with no mileage limit.
- More flexibility: Typically, you’ll pay for a long-term car rental on a month-to-month basis, which allows for more flexibility compared to a lease. Additionally, some companies allow you to replace your vehicle with another model during the rental period.
Disadvantages of a long-term car rental
- Could be more expensive: You will generally pay more to rent a car long term than to rent a vehicle.
- Less selection: While dealerships have a wide variety of vehicles available for hire, you’ll want to take what you can get with a car rental.
- Age restrictions: While you will need to be at least 18 to rent a car, you must be at least 25 to rent one.
Short term car rental options
There are two main options for getting a short-term car rental, including:
Most franchise car dealerships offer car rental agreements, but it may be more difficult to find a dealership that offers short-term rental agreements. If you want to work with a dealership, be sure to do your research beforehand to decide what type of car you want.
Also take the time to shop around and compare your price options at several local dealerships.
Lease takeover platforms
Several online platforms are available to help drivers who want to get out of a car lease get in touch with people who want to take over a lease, such as LeaseTrader and Swapalease.com. With this option, you can search listings based on factors such as car type, remaining lease term, location, and how much you can afford to pay each month.
If you find a lease you want to take over, you can contact the seller and then start the transfer process through the platform.
Long-term car rental options
Long-term car rentals are available from a wide variety of rental companies, such as Avis, Budget, Enterprise and Hertz. However, not all rental companies offer extended terms, and some may only offer long-term rentals on certain makes and models.
You can visit your preferred rental agency’s website or call a local office to check vehicle availability and rental duration.