Is the best way to lease doing ultra low mileage 7500 for 24 or 36 months and then not taking it to term and having a dealer buy it out? I typically actually lease with the miles I’ll use and just turn the vehicle in
2 Likes
Depends on the vehicle
1 Like
What helps you determine the correct vehicle?
The largest factor will be how the residual value assigned by the leasing company, projects against real world values at the time of the turn in.
For the majority of cars this would result in negative equity.
For many of the remainder, the “positive equity” is just a slight recoupment of the high lease payment resulting from an unrealistically low RV. Looking at you, Honda, for the majority of 2010-now.
Neither strategy is saving you money.
There are aome rare cases like the EQS where it makes sense to do a 7500 mile lease, even if you end up using more, as the per mile cost from the residual change is higher than the per mile cost of the over mileage penalty.
The last few yours are an anomaly not the norm. Most cars will end a lease with little to no equity (except for a few exceptions like Honda mentioned) and you should expect such going in.
2 Likes
Even that case requires taking the lease to its term. OP’s main query seems to be about exiting early, which is impossible without massive negative in the EQS.
OP seems to be under the impression one can make payments based on a 7,500/year lease, drive more than that, and then exit without any apparent penalty before the lease ends.
That’s usually impossible under normal circumstances.
2 Likes
What about driving over miles and then leasing next car from the same manufacturer? I heard they don’t penalize you for going over the miles. Is that true to some point?
1 Like
Sometimes it is, but it isnt something i would rely on.
AFAIK, Acura/Honda financial is the only lessor that formally has a program to waive some miles and excess wear and tear.
BMWFS and MBFS used to show some courtesy to returning lessees but according to some reports that changed during the pandemic.
The bigger question is, are you actually saving any money and/or getting value this way? Honda leases were uncompetitive for years. Acura’s products have often been uncompetitive.
What’s the point of being in a bad lease or an uncompetitive product just to have, say, $1,500 waived at the end?
And why tf would anyone want to stay with one OEM lease after lease after lease?
Assuming:
- not a situation where the MSRP is so high that the RV drop for 10k/12k/15k is prohibitive
- for the purposes here, we going to ignore interest/money factor
If the idea is to sell/trade out early to a dealer who will buy it out, if actually makes very little difference as the buyout is effectively the RV + balance of payments (sans unearned rent). So if you have higher RV and lower balance of payments for 7.5k vs 10k, it’s ultimately a wash.
But if you purposefully get less miles than you need, you’re playing a dangerous game if you’re stuck with negative equity and end up needing to take it to term.
This is an interesting point - If I get a vehicle with RV 64% 24/7.5 but plan to use 15k miles per year. As long as the milage penalty at the end of lease term keeps my monthly payment less than if I did 24/15 it essentially is a win? I would just have to budget out the $2k in total milage penalty throughout the years I suppose
The latter here was my thought process initially. I started thinking about it after seeing the Urus lease post a couple days ago. mllcb42 made a good point above which might be a more safe a viable option because you would have all of the numbers on your lease contract and be able to estimate your total cost
$2k in total mileage penalty? Which brand charges only $2k for 15k in overages?
The easiest way to look at this is just to compare the per mile overage cost. In most situations, it’s cheaper to get the miles upfront if there’s a reasonable likelihood you will go over, but it isn’t always the case. On the EQS, the per mile overage is $.25/mile. If you do the residual bump, it ends up being something like $.30/mile. In that case, there’s no good reason to do the residual bump. Usually, the math goes the other way around though.
Sorry, wasn’t clear. It would only be 7.5k over (total use of 15k miles)
AH exactly! The penalty on milage overage on the EQS and even EQE seem to be a couple hundred cheaper per month then dropping the RV to getting a higher milage lease. Thanks for walking my slower brain through this!
You realize that a 24/7.5k term allows you to use 15k miles total right (ie 7.5k miles per year)? Usually, only super high-end or exotic vehicles would have lower mileage options.
The Urus lease was a huge gamble on market values resulting in positive equity before the end. Taking that lease to term would result in one of the worst leases of all time.
The OP of that thread didn’t really think everything through. He listed buying it at RV at lease end as one of his options, which would be stupid given the numbers.