Can I Extend My Auto Lease?

What if you want to keep your car longer than your current lease? Well, you might be able to extend it. Most automaker finance units and third-party financial institutions will grant a one-time extension of a car lease past its end date by a fixed number of months (generally 12 or fewer) or on a month-to-month basis to a maximum allowance, though whether it’s a good idea depends on your situation.

Related: Is Now the Time to Buy Out Your Car Lease?

First, call the lender to request an extension and find out its individual procedures and terms; some leases include a provision for an extension. Otherwise, the auto finance unit, bank, credit union or other lessor can set its policies, fees and rules — including whether they would handle the extension or send you to a dealer. Some make it easier and more informal than others, and some require you to sign a specific agreement for the extension that sets out terms.

Being able to get an extension also assumes you’ve fulfilled the terms of the original contract, including regular on-time payments. It’s also in the lenders’ interest to make it relatively painless for good customers to put off the lease end temporarily while sorting out a new purchase or lease.

Just Because You Can, Should You?

Whether a lease extension makes sense depends on your situation. If you’ve procrastinated on planning for your next vehicle and the end of the lease has snuck up on you, an extension offers time to make your best deal on a new vehicle to buy or lease. It would also make sense to delay the lease end temporarily if you’re uncertain (due to job or family situations, for example) about whether you will need to replace the vehicle.

But if you’re debating buying, you’d be better off financially to get a loan for the payoff price (based on the residual value in your contract). You’ll be able to capture any equity you might have gained from its value relative to the buyout price, and you’ll own a car you can sell or trade in when you feel like it. We have more details on why it may be a good time to buy your leased car here.

A ‘Re-Lease’ Is Not an Extension

What we’re talking about here is an extension of your current lease, not “re-leasing” the vehicle. Re-leasing is another way to put off returning the vehicle — and one promoted by a few automakers — but it involves committing to a new lease contract for the vehicle for a fixed period, usually up to three additional years.

With a re-lease, you are committing to new terms and a new payment to lease what is now a used car. A re-lease can involve more expensive used-car financing rates and a reset of the residual value and buyout price in ways not favorable to you. It also exposes you to potential repair costs thanks to an expired or soon-to-expire warranty. Weren’t having a new vehicle and a new-car warranty reasons you leased in the first place?

Lease Extension Pros

There are several reasons a lease extension could work for you:

• There might be no extra fees or costs.
• You’ll have a few extra months to get the new vehicle you want by ordering it or finding a specific model.
• It’s a way to stall a little to see if favorable lease deals and incentives are on the horizon.
• It’s a little more time to save for the down payment or upfront costs for a new-vehicle purchase or lease — or it’s a little more time to ponder whether to buy or lease your next vehicle.

Lease Extension Cons

There also are downsides and reasons to be wary:

• There might be extension fees.
• Many lenders do not reset the residual value in the contract even though the vehicle is continuing to depreciate. If you end up buying the vehicle, it won’t be as good a deal later as you would be getting now, and the extra lease payments are wasting money.
• Some lenders do not add a prorated additional mileage allowance with an extension, leaving you open to fees.
• Any additional gap insurance or other products, such as wheel and tire damage insurance, that you bought separately through the dealer at the start of the lease might expire with the end date of the original lease contract.
• You need to be sure your vehicle warranty remains in effect through the extension period so you aren’t on the hook for repairs.

More From Cars.com:

• Buying a Car: Cash, Lease or Loan?
• How to Negotiate a Car Lease
• How Much Does It Cost to Lease a Car?
• What Is an Auto Lease Disposition Fee, and Can You Avoid It?
• Glossary of Car-Leasing Terms
• More Leasing News

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