I drive 15-20k a year. I am thinking instead of paying for miles upfront, I could always buy at the end, and sell/trade immediately above residual (assuming today’s used car market conditions hold). Does that make sense?
FYI not looking for luxury cars- either an EV or plugin hybrid crossover
Make sure its a honda otherwise Residual is a bit up in the air
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All the plugin leases are very high except for a few Jeep 4XEs, should be purchased most of the time.
EVs dont hold value well, I would suggest leasing them without expecting equity. I have lots of EV leases available if I haven’t quoted you yet
There’s no reason to assume this.
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ok it may not be higher than residual, but it would not be lower either right?
it can easily be lower on EVs, one of the reasons to lease is that you can just give it back to the bank and walk away if the end value is lower than residual
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Keep in mind that EV tech is rapidly changing, as are incentives and prices. In a few years whatever you drive could become very outdated or incentives/price changes could make buying new even more affordable than today which would further push the value of your used EV down.
To summarize:
- historically most leases were worth less than the residual at disposition
- and if you are leasing with lower miles than you are driving, trying to trade out at the end to avoid mileage means you are even more likely to be under water
- and PHEV/EV residuals tend to be lower/not subvented, making it even less likely those are going to have equity near disposition
In your situation, I wouldn’t lease for less than 15k/yr and assume you’d have to drive it to disposition, unless you’re writing a negative equity check.
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It’s always cheaper to setup the lease upfront with the miles you think you need, if you under shoot it’ll still cost you less than if you over shoot. Always set yourself up to walk away at the end, if there’s equity great, if not just turn it in. One accident and any equity could be gone, leave the risk on the bank.
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You cannot walk way for $0 at the end if that’s what you’re asking.
You’ll be on the hook for either the negative equity or the charges for miles, excess wear and tear, etc.
“Always” is a strong word. There are plenty of leases where it’s cheaper to pay the excess mileage charge at the end than to buy more miles up front. The EQS leases are one recent example of this.
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the thing is, I will likely be exceeding the 15k as well. In my situation, would you:
- go with a high mileage lease (e.g. 20k)
- go with a 15k lease and take the hit for excess miles (up to 5k a year)
- finance the car, and sell after 3 years?
Do that math on the cars you are interested-in and see. Ford is the only captive I’m aware of with longer lease terms. It’s hard to chase hypotheticals any further since it depends on the programs and excess mileage rate.
Unless you are getting free charging, it’s hard to make a case for either.
There’s a difference between buying miles up front or taking a different residual that reflects a higher mileage allowance. Usually you can buy miles up front when the lease is over a certain amount like 20k/yr, it’s usually cheaper than after the fact and sometimes those are refundable. In most cases going with a 12k/yr payment vs 15k/yr payment is much cheaper than paying the overage charge on the 12k if you go to 15k… I don’t know the specifics on the battery Benz.
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And you pay rent on the additional depreciation, so higher MF works against you.
Yes, and OP specifically said not luxury car, though
I wouldn’t rule out anything if I’m trying pay the lowest utility for the most miles.
Besides EQS, I think the only other vehicle I remember buying miles at lease end was cheaper than front loading was the BMW i8?
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care to elaborate? Whether there is a case for a car/class is highly subjective
Kia sportage PHEV base rate is 0.00237 and 60% for 36/15k… not too bad? Or are you referring to dealer markups?
0.00237 with no lease cash is not good…
At base MSRP with no dealer markup this is what the lease would be (numbers are for example purposes, this is not a lease offer)
2023 Kia Sportage PHEV base
MSRP: $39785
$2000 driveoff
36/15k - $595 plus tax
On Tier 1 approval through Kia Financial
Its a pretty awful lease to me, I have Ioniq5 that is close in size that is way less and comes with 2 years of free charging and 3 years of free maintenance.
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