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Anyone who’s started shopping for a new or used car knows that car prices have increased dramatically in the past year. Thanks to inflation, as well as the effects of the COVID-19 pandemic, buyers can expect to pay more if they’re shopping for a vehicle.
But owners aren’t the only ones being affected by the current shortage: leasees, or those with current leases on vehicles, are being offered lease extensions in many cases according to AutoNews.com.
Read more to determine how a lease extension works, and whether or not it’s the best decision for you. And if you’re planning on purchasing your vehicle at the end of the lease, you may end up saving money, especially if your contract began before the pandemic started to affect prices.
What is a lease extension and how does it work?
A lease extension is a fairly simple thing—like it sounds, a lease extension offers those who are locked into a current lease to extend their contract, usually for a period of 6 months or more. It’s a great option but isn’t always appealing to everyone.
If you qualify for a lease extension, the vehicle manufacturer will reach out, usually sending an electronic notice, or papers in the mail. The manufacturer will remind you of your lease’s end date; they’ll offer you the chance to extend it if you’re interested.
Lease extensions don’t typically cost you more money, meaning that you won’t be making a higher monthly payment than you were before.
But be careful: Phishing emails and scam letters are common, so be wary of any phony advertising which seems to be offering you an alternative way to end your lease or purchase your vehicle.
Should you opt for a lease extension?
There are a few different circumstances in which opting for a lease extension could be a good idea. The first is if you’re not ready to transition on to another vehicle, whether you’re buying or leasing again.
If your lease end date is sneaking up on you, and you’ve yet to complete your end-of-lease checklist, it’s a good idea to consider an extension instead of being hit with lease violations, which could come from a dinged exterior or dirty cabin that you might want extra time to take care of.
The second is based on your love of the vehicle. If you like what you’re driving, and aren’t ready to give it up quite yet, consider the lease extension.
You may find that you want to purchase the vehicle at the end of the lease—and if your contract began in 2019 or before, you’ll likely pay less to purchase the vehicle, because your rates were locked in pre-pandemic.
MORE: How to Break a Car Lease
Find the right coverage for your leased vehicle
Leasing can be more affordable than outright purchasing a vehicle, or financing one—but the insurance rates for a leased car, truck, or SUV are typically higher than normal. This is because the dealership wants that car back after you’re finished with your lease—and making sure it stays in good condition is their number one priority.