Choosing a lease term
A lease term is the number of months you agree to keep and pay for the car, and it's fixed when you sign. Most new-car leases run between two and four years, with 36 months the most familiar choice.
Which lease term fits you
Pick the term by total cost and warranty. Not just the lowest payment.
24 months
The car stays new and under warranty, and you can change cars often.
Watch fora payment that is often higher, because a car loses value fastest early
36 months
The usual balance of payment, warranty coverage and flexibility.
Best whenyour miles keep you inside the warranty's mileage limit
39 months, odd terms
Worth taking when the lessor is supporting that term with a higher residual or a lower money factor.
Watch forthe total cost, not only the payment
42 to 48 months
Or longer. A lower payment, but you'll likely drive past the basic warranty and pay for tires and brakes.
Watch forif you keep cars that long, compare with buying
Each term has its own residual and rate, so ask for quotes at two or three terms with the same miles and the same amount due at signing.
Key takeaways
The best lease term usually ends before the factory warranty runs out and before your plans are likely to change, at a total cost you're comfortable with, not just the lowest payment.
Common lease terms and why some are odd numbers
Lessors set a residual value and a rate for each term they offer, commonly anywhere from 24 to 48 months, and some go longer. Because each term has its own numbers, a manufacturer can support one term in a given month with a higher residual or a lower money factor, which is why you'll see offers built on 33 or 39 months. When one term is supported, it can beat its neighbors on both payment and total cost, so ask for quotes at two or three terms for the same car.
How the lease term changes your payment
The payment has two main parts: depreciation, which is the drop from the capitalized cost to the residual value spread over the months, and the rent charge, which is the finance charge. A longer term spreads depreciation over more months, but the residual is lower because the car is older at the end, so the payment usually falls less than you'd expect.
Example with made-up numbers, not a real car or offer: a car with a $50,000 MSRP is leased at a $47,000 capitalized cost and a money factor of 0.0025.
36 months (example), residual 60 percent or $30,000: depreciation of $472 plus a rent charge of $193, about $665 a month before tax, or about $23,930 in base payments.
48 months (example), residual 50 percent or $25,000: depreciation of $458 plus a rent charge of $180, about $638 a month before tax, or about $30,640 in base payments.
In this example the longer lease saves about $26 a month but costs about $6,700 more in total, for twelve more months of driving. Per month of use the two are close; the real differences are the warranty, tires and brakes, and how much can change in four years.
The same car at two terms
About $26 less a month. About $6,700 more in total.
About $665 a month before tax. Residual 60 percent, or $30,000.
About $638 a month before tax. Residual 50 percent, or $25,000. Twelve more months of driving.
Made-up numbers, not a real car or offer: $50,000 MSRP, $47,000 capitalized cost, money factor 0.0025. Totals are base payments before tax.
Lease term and the factory warranty
A lease that ends inside the new-car warranty means the manufacturer pays for covered repairs the whole time you have the car. Basic bumper-to-bumper coverage commonly runs 3 years or 36,000 miles, whichever comes first, and some brands cover longer; your warranty booklet has the exact terms. Miles can end coverage before the calendar does: at 15,000 miles a year, a 36,000-mile warranty runs out around month 29.
Longer terms also bring more upkeep. A car in its fourth year may need tires, brakes or a battery, and lessors' wear standards cover tire condition, so bald or mismatched tires can turn into a charge at turn-in.
Lease term, residual value and your options at the end
The residual is locked in. It's set at signing for your term and miles, and in most leases it's also the price you can buy the car for at the end, plus any purchase fee. A shorter term means a higher residual percentage, because the car is younger when you hand it back. See residual value.
Getting out early costs the most early. Federal rules require every car lease to warn that ending it early can cost a substantial amount and that the charge is likely to be higher the earlier you end it. See getting out of a car lease early.
You can often extend. If your next car isn't ready, many lessors allow a short extension at the end. See extending your car lease.
Which lease term fits you
24 months: the car stays new and under warranty, and you can change cars often. The payment is often higher, because a car loses value fastest in its first years.
36 months: the usual balance of payment, warranty coverage and flexibility, as long as your miles keep you inside the warranty's mileage limit.
39 months and other odd terms: worth taking when the lessor is supporting that term. Compare total cost, not only the payment.
42 to 48 months or longer: a lower payment, but you'll likely drive past the basic warranty and pay for tires and brakes. If you keep cars that long, compare with buying; see lease or buy.
Can you lease a car for less than two years?
New leases shorter than about 24 months are rare, because a car loses value fastest at the start. People who want a short commitment often take over the rest of someone else's lease, which the lessor has to approve, or rent instead. See transferring a car lease.
Lease terms in California
State lease law covers terms over four months. California's Vehicle Leasing Act applies to personal-use leases longer than four months (Civil Code 2985.7), and the contract must show the Regulation M disclosures, including the number of payments and when they're due (Civil Code 2985.8).
No cooling-off period on a new car. Once you sign, you can't cancel a new-car lease because you'd prefer a different term, and California lease contracts say so on the first page. From October 1, 2026, that notice also explains the new three-day right to cancel for used vehicles priced at fifty thousand dollars or less, which comes with a restocking fee and a 400-mile limit (Civil Code 1784.43).
What to ask before you choose a lease term
Can you quote this car at two or three terms with the same miles and the same amount due at signing?
What's the total of payments at each term?
When does the basic warranty end, in months and miles, compared with the lease?
Is any term supported by the manufacturer this month?
What would it cost to end the lease a year early?
Is there a maintenance plan, and does it last the whole term?
Mileage and term work together, so choose them at the same time; see choosing your lease mileage.
How 021 helps
We can quote the same car at different terms side by side, so you can see what a shorter or longer lease does to the payment before you choose.
021 gets several dealers to quote the same car and negotiates the whole deal, and you see one written quote with the payment, drive-off, term, miles, taxes, fees and 021's fee before you agree to anything. One dedicated specialist handles sourcing, negotiation, paperwork and delivery.
Term and the factory warranty
Line the lease up with the warranty. Compare months and miles.
Beforeyou choose a term
Ask when the warranty ends
- In months and in miles, compared with the lease
- Your warranty booklet has the exact terms
Month 29at 15,000 miles a year
Miles can end coverage first
- A 36,000-mile warranty runs out around here at that pace
- After that, covered repairs become your cost
3 yearsor 36,000 miles, whichever comes first
Basic warranty commonly ends
- Bumper-to-bumper coverage commonly runs this long
- Some brands cover longer
Year 4longer terms
More upkeep
- The car may need tires, brakes or a battery
- Bald or mismatched tires can turn into a charge at turn-in
Common questions
What is the most common car lease term?
Is a 24-month or 36-month lease better?
Why are some car leases 39 months?
What is the shortest term you can lease a car for?
What happens if my lease lasts longer than the warranty?
Can I end a car lease early?
021 Auto Leasing is a licensed California autobroker (license #82402). All new cars arranged for sale are subject to price and availability from the selling franchised new car dealer.