Car rentals have seen wild swings in popularity over the decades. In the 1990s, leasing expanded as an affordability option, allowing people to drive high-end luxury cars for a fraction of the monthly payment through financing.
However, when resale values plummeted in the early 2000s, the industry found itself in dire straits, with the banks holding the proverbial bag. Then came the 2020s, where supply chain chaos and vacant lots overwhelmed the market and leases all but disappeared.
Today, things are back to normal, but whether or not leasing is a good idea depends on several factors, some of which may be out of your control. If you’re thinking about kicking the tires and signing a lease or just buying, here’s how the market is shaking out right now.
What exactly is a car rental?
Hybrid and remote workers can take advantage of leasing today
You have two main options when buying a car: you can pay cash to own it from day one, or you can finance it and make monthly payments over time.
If you have a long daily commute or prefer to drive your cars “until the tires fall off”, financing is a better option. In certain cases, financing may be better if you want to replace the vehicle with aftermarket accessories or engine modifications, as lease agreements require you to return the vehicle in the same condition as when you bought it.
A standard lease program today drives between 10,000 and 12,000 miles per year over two or three years. While you can still find 15,000-mile-a-year deals, their monthly payments will be higher because lenders calculate a steeper amortization curve. Conversely, low-mileage leases, limited to 7,500 miles per year or so, have become popular with hybrid and remote workers.
All things being equal, the lower the mileage breakdown of the lease, the lower your monthly payment. That’s because when you lease, you’re basically paying for depreciation, or the value the car loses while you’re driving it. So, the lower the annual miles of the lease, the lower the depreciation will be.
Then at the end of those two to three years, you either hand back the keys and walk away, or you buy the car at a predetermined price, called the residual value.
- What’s Included
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M12 impact driver, hammer drill, 3/8-inch ratchet, charger, two batteries
- Warranty
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5-year warranty on tools, up to 3 years on batteries.
If you’re looking for a great DIY starter kit from Milwaukee, this M12 3-tool combo kit is it. With an impact driver, hammer drill and 3/8-inch ratchet, 4Ah and 2Ah batteries, this kit is a great starting point for projects both at home and in your car.
Leasing is a good idea right now
The short answer is it depends
From a market perspective today, since residual values are more stable and somewhat more predictable than in the past for trucks and SUVs, an automaker’s financing arm can generally offer lower payments for these vehicles. Because demand for sedans in general is not as high as trucks and SUVs, some manufacturers and dealers may offer specials to keep inventory moving.
In other words, it’s a good time to lease a car, and it may be the right move if:
- You need the latest technology: By leasing a new car every few years, you’ll have the most up-to-date safety systems, infotainment features, and powertrain upgrades.
- Desire the lowest possible payment: In general, the lease payment will still be lower than the monthly loan payment for the same car in today’s interest rate environment.
- You don’t want to deal with maintenance costs: With a rental car, you’ll be covered by a factory warranty for the duration of the rental, so any unexpected mechanical problems are dealt with by the dealer free of charge.
However, even in an ideal leasing market, it only makes sense if you can stay within mileage parameters. Excess mileage penalties at the end of the lease can offset the lower initial monthly payment associated with financing. However, there are a few caveats to keep in mind:
- Review your daily schedule: As a result, if you drive more than expected, leasing may be less forgiving than financing due to mileage restrictions. If you believe that your driving habits will remain relatively the same for the next two to three years, leasing may be a good option. But it can be difficult to predict because unexpected life changes can happen.
- Try using what you have: Similar to rental mileage penalties, unused miles on your rental are not refunded to you at the end of the term. If you turn in your rental vehicle with, say, 2,000 miles toward your share, you won’t be reimbursed for those miles, even though you actually paid for them during the term.
The best cars to rent in 2026
Electric cars can be a good option
Not all cars are created equal in a lease. If you have considering the leasethese cars can offer the best conditions.
- Main SUVs: vehicles such as Honda CR-V, Toyota RAV4and Hyundai Tucson is always a good choice. Demand for these SUVs (and similar models) is typically strong in the pre-owned market, so lenders can set higher residual values, which translate into lower monthly payments. The GMC Terrain and Mazda CX-50 also lease well.
- Everyday Sedans: Leasing a Honda Civic, Toyota Corolla, Hyundai Elantraor Volkswagen Jetta can be one of the most affordable ways to drive a new car. In general, a sedan will have better fuel economy than an SUV, which can save you money over the lease term.
- Electric Vehicles: With EV sales cooling off, buyers may be concerned about how much a new EV will be worth in a few years. Leasing allows you to drive an electric car without worrying about future resale value.
3 questions to be asked at the dealer
These will give you more clarity about the fine print
Don’t just look at the monthly payment. To make sure the fine print doesn’t catch up to you later, ask these three questions:
- What is the money factor?
This is a disguised interest rate and dealers are not legally required to show it as interest. It is written as a small decimal like 0.0025. Multiply that decimal by 2400 to see the real interest rate (APR). In this case, 0.0025 is 6%. If that number is higher than current financing rates, the dealer may have marked it down for extra profit.
- What is the total payment due at signing?
TV and YouTube ads can run low on display, but require a down payment of $4,000, $5,000 or more. Discounting too much is risky because leases are structured differently than a finance contract. If the car is paid off during the lease, the insurance pays the lender (ie the lessor) and you can’t get that down payment back.
- What is a disposition fee?
Think of it as a “re-storage” fee when you return the car. It’s usually between $300 and $500, and it’s good to be able to tell so there are no surprises at the end of the lease. Often called a short-term dispo fee, some dealers and automakers will waive it if you plan to re-lease, as customer loyalty far outweighs a one-time fee.
Bottom line
Leasing in 2026 isn’t a waste of money, as some old finance groups claim, if you can stick to the annual mileage allotment. If you like the smell of a new car and want to stay under warranty, leasing can be an affordable and enjoyable way to drive your next car.
