High Mileage Lease

doogan3

Hi Guys,
Was out looking this weekend for a new family SUV. Wife puts on about 20K/year. Looking at SUV's at the 50K mark. Not ready to buy yet - just trying to decide on which model would work. A couple of dealers strongly suggested that we consider a high mileage lease. While I know any financial structure is possible, I never thought about doing this, or if it made sense. It would be a business expense.

Generally is this waste of my time, or is it worth unpacking this further to see how it looks?

appreciate your thoughts

Michaell

Most leases allow a maximum of 15K miles per year.

However, extra miles can be 'purchased' up front for a set amount per mile. Lexus, for example, charges .20/mile. This amount is deducted from the calculated residual.

Mr_Shiftright

So that nicks you for another $27 a month on a 36 month lease, or am I figuring wrong?

Michaell

Mr_Shiftright said:

So that nicks you for another $27 a month on a 36 month lease, or am I figuring wrong?

(5,000 extra miles per year * 3 years) * .20/mile = $3000, or an extra $83/mo over 36 months.

doogan3

Guys - thanks for input. I have not compared buying vs High Mileage leasing yet. Will let you know If I get numbers together.tx

Mr_Shiftright

OH, 5K extra PER YEAR....I didn't read that right. Geez, you might as well buy it.

doogan3

Hi Mr Shiftright - so in general it makes sense to buy at this number of miles?

Mr_Shiftright

Well that's just my two cents. I don't have all the numbers for your deal in front of me. What I would do is compare your lease monthly with monthly payment if you are financing for a purchase,--- but then estimate resale value on the purchase after three years, and figure out what your actual monthly expense was versus the lease, after you sell the car and cash in on your equity.

I know that leasing is always somewhat more expensive that buying (well, usually, not always), but with all these mileage charges (36 X $83 = almost $3,000) maybe a purchase makes sense.

Michaell

Mr_Shiftright said:

Well that's just my two cents. I don't have all the numbers for your deal in front of me. What I would do is compare your lease monthly with monthly payment if you are financing for a purchase,--- but then estimate resale value on the purchase after three years, and figure out what your actual monthly expense was versus the lease, after you sell the car and cash in on your equity.

I know that leasing is always somewhat more expensive that buying (well, usually, not always), but with all these mileage charges (36 X $83 = almost $3,000) maybe a purchase makes sense.

And, with a lease, buying the miles up front and spreading out the pain over the life of the lease is better than having to cough up a large amount of money at the end of the lease.

Which I may have to do, given that I'm at almost 35,000 miles into a 45,000 mile lease .. and I've got a year left.

doogan3

Thanks Guys - as soon as I move ahead with numbers I will post in relevant sections. Looking at Q7, MDX and if they are too $$$, maybe the new pilot. Need a third Row of seating...

stever

The business use is a wrinkle. It may be to your advantage to lease and get more off on your taxes. But I've never done that and don't really know. Good question for your accountant.

kyfdx

doogan3 said:

Thanks Guys - as soon as I move ahead with numbers I will post in relevant sections. Looking at Q7, MDX and if they are too $$$, maybe the new pilot. Need a third Row of seating...

Agree with @stever It may still benefit you to lease, since it's deductible, and lease payments aren't subject to maximum depreciation amounts like a purchase.

Also, banks run different lease programs for high-mileage business leases. It's definitely worth checking out.