If your car lease is ending and you’re thinking about keeping your current vehicle, you might be wondering: Can you extend a car lease?
The short answer is yes.
But should you? That’s a more complicated question.
Extending your lease might seem like a good idea, but there are several factors to consider before making a decision.
Whether you’ve grown attached to your car, are facing financial uncertainty, or just need more time to weigh your options, we’ll break down the pros and cons of extending a car lease and what you should keep in mind.
Can You Extend a Car Lease?
Extending your car lease is possible, but the terms may vary depending on your lender. So, how do you extend a car lease?
Generally, it’s as simple as reaching out to your leasing company and asking about extension options.
Some lenders offer month-to-month extensions, while others require you to commit to a set period—usually between six and twelve months. Extensions beyond one year are rare.
If you only need a little extra time to finalize your next steps, many lenders are willing to provide short-term extensions, sometimes as brief as ten days.
Types of Car Lease Extensions
There are two main ways to extend a vehicle lease:
1. Informal extension (month-to-month)
Some leasing companies allow lessees to continue making monthly payments beyond the original lease term. This is usually a short-term arrangement that allows for flexibility while next steps are being decided.
2. Formal lease extension
A formal extension involves signing a new lease agreement with the leasing company, which usually extends the lease for a predetermined period (e.g., from six months to a year). This option often comes with revised terms and conditions.
When Should You Extend a Car Lease?
Extending a car lease can be a strategic decision depending on your individual circumstances and needs. Here are some of the best times to extend your car lease:
Upcoming release: If a new car model you’re interested in is coming soon, extending your current lease can give you time to wait for the new model.
Customization: If you ordered a new car with specific features or customizations and it hasn’t arrived yet, a lease extension can fill the gap.
Budget constraints: If you’re not financially prepared to buy or lease a new car, extending your current lease can give you more time to save or improve your financial situation.
Better deals: Extending your lease can allow you to wait for better lease deals or promotions, which could save you money in the long run.
Below mileage limit: If you haven’t used up your allowed mileage and your car is in good condition, extending your lease can make financial sense as you’re effectively getting more value out of your lease.
Happy with your current car: If you’re happy with your current car and it meets your needs, extending your lease may be a convenient option. This allows you to avoid the hassle of switching to a new vehicle.
Job changes: If you’re experiencing job changes or uncertainties, extending your lease can give you time to adjust to your new situation before committing to a new car.
Down payment: Extending your lease can delay the need for a new down payment, which could be beneficial if you’re currently managing other expenses.
Read More: Do You Need a Down Payment to Lease a Car?
How to Extend a Car Lease
Contact your leasing company: Contact your leasing company to discuss your options for extending your lease. They will provide you with information about the terms of the extension and associated costs.
Review the terms: Carefully review the terms of the extension, including the length, monthly payment, and additional fees.
Sign an extension agreement: If you agree to the terms, you will need to sign a lease extension agreement. Be sure to keep a copy for your records.
Update insurance: Make sure your car insurance is updated to reflect the extended lease period.
Pros and Cons of Extending a Car Lease
So, a lease extension seems pretty straightforward, right? However, we all know that there’s no such thing as a free lunch, especially in the dealership world.
While an extension may buy you some much-needed time in the short term, it could come back to haunt you in the long run. Luckily, we’ve got the good news and the bad news about lease extensions right here.
Advantages of Extending a Lease
It Gives You Time
If you’re undecided about your options at the end of your lease and want to make sure you’re in a good place before committing to a decision, a lease extension can give you more time without having to worry about what to drive in the meantime.
It May Open Up Options for You Later
Similarly, if you’re waiting on a new car model, still experiencing supply chain-related delays on an order, or want to see if rates or deals improve before making a decision on your lease.
No Down Payment
Extending your lease means you won’t need to make a down payment for a new lease or purchase.
Convenience
Extending your lease saves you the time and effort of looking for a new car. And, depending on your lessor’s process, extending your lease can be fairly easy (and quick).
Credit
A lease extension shouldn’t affect your credit.
Read More: Can You Lease A Car With Bad Credit Score?
Drawbacks to Extending a Lease
Extension Fees or Additional Costs
You may have to pay more than you were paying monthly to extend the lease.
Mileage Charges
If you’re close to (or at) your mileage limit at the end of your original lease term and enter into an informal extension, you’ll almost certainly go over your mileage limit and be charged accordingly.
Out-of-Warranty Repairs
Your warranty may expire during or before your lease extension, leaving you responsible for repairs that were previously covered. As your car ages, it may require more frequent and expensive repairs, especially if it’s out of warranty.
Depreciation
Depending on whether your car’s residual value is re-evaluated for an extension, you may get a worse deal on your car if you decide to buy it after the extension anyway.
Future Needs
Consider your future car needs. If your lifestyle or commute is likely to change, extending your lease may not be the best option.
Final Thoughts
Extending a car lease can provide flexibility and convenience, allowing you to keep your leased vehicle for a longer period. By understanding the terms and costs associated with a lease extension, you can make an informed decision that fits your needs and preferences.
