High mileage lease (22k mi/yr) analysis

Hi all,

First-time potential lessee here.

I drive about 25k miles/yr and always thought that I would have to buy my next car.

I recently went to a Volvo dealer where the salesperson showed me that if I leased a car today and paid the extra 10,000 miles/yr over a standard 15k mi lease (at 20 cents/mile), and then decided to buy the car at the end of the lease for its residual value, then the total of all of my payments plus the residual would actually be LESS than the cost of purchasing the car today in cash.

I couldn’t believe this to be true until he showed me the math. Granted I am not a lease expert but after looking at the numbers at home, it seems that the math is sound.

At the end of 3 years, I want to turn in the car, I could. If I want to buy it, I get a great deal. What would be the downside (if any) of leasing versus buying in this case?

I padded the mileage - I probably drive closer to 21 or 22k per year but he ran the numbers at 25k just to be safe.

Yeah at the end of your financing term you still have a car that’s worth X amount of dollars. That’s the catch. At the end of your lease term, you have to get a loan with X amount of interest added on or you can pay cash that might be worth it.

The reasons to lease are if you use low mileage, want a new car every 3 years without having to deal with maintenance, and don’t want to tie up capital in a new purchase that could be used better elsewhere.


Show us this math. I highly doubt it’s there advantage to lease a car over purchasing when driving 25k/yr.

maybe ask @buster11xx about high milage leases…he claims he’s done it many times


Thanks for the responses. I should clarify a few things:

  1. The car purchase would be cash, so there would be no financing charges.
  2. The money factor on this car is .00001, so it’s practically zero
  3. I looked at the paperwork they provided and saw that the car’s selling price would be $3,300 less if I were to lease instead of buy. The salesperson said that the manufacturer offers much bigger incentives on a lease vs. buy because they want to keep me in the family and have me lease another Volvo after this lease is up.

Here is the worksheet to buy the car

Here is the worksheet to lease the car. The “Total Cost to Purchase” was written by the sales person.

I buy the salesman’s argument. At .0001 money factor, the lease is free money especially given that inflation is nearly 3% right now. Also, yes, Volvo has additional incentive money on the car for leasing since the residual is relatively low ($3200 in June, and I think the same in July).

The unknown is the residual value. However, if you paid cash for the car, you’d be a) putting a lot of money in a depreciating asset and b) you’d still have the unknown of the residual value.

Given that the residual on the contract is already pretty low (48% before the extra miles), I’d say that Volvo is being pretty realistic/ conservative as in I doubt the car would be worth LESS than what they’re quoting.

However, at the end of the lease, if the value of the car is less than what your contract says, you can always just pay the disposition fee and walk away from it.

So the lease is free money with an option to walk away at the end - makes sense to me. But I would try to get them to discount the car more, maybe another thousand dollars or so! The 2018s are arriving and there at a decent number of T5 momentums on the lot.


Also, note that they have marked up the bank acquisition fee by $200. Volvo’s base is $795 but allows the dealer to charge up to $995 for extra profit. However, given that their doc fee is so low at $80, I’d say it’s fair game.

Also, don’t put any money down on a lease. If the car is somehow totaled before the lease contract is up, you’ll lose that money as your insurance will pay the leasing company the value of the car but will not pay you for your down payment.

The only money you should put down on a lease is the first month’s payment and security deposit (if required). But I don’t think Volvo requires a security deposit.

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That monthly already includes the additional mileage overage? Does it make sense to prepay for 10k/year extra when you say you may only use 6k/yr? How much would the charge be if you were to pay at the end? $.20/mile sounds common at lease end. If it’s the same, no point in prepaying.

Yeah the 10k was the estimate when I walked into the dealership. It wasn’t till I returned home when I checked my mileage log that I realized I would probably only need to buy an additional 6k. So when I finalize the deal I will adjust the additional mileage accordingly.

Buying miles up front is $0.20. Buying miles as an overage is $0.25. So there is a 5 cent difference per mile.

In this case, you might be better off leasing since there is a lease cash offer and no purchasing/financing cash offer. The acq fee eats away at some of the savings though.


insurance cost is another factor to consider:

if you lease the car you are required to maintain a certain amount of coverage. If you purchased the car you would have the option to lower your insurance coverage which would be less $. Not that I would recommend doing that, but that’s another factor to consider. If you carry high coverage anyway then it doesn’t matter.

Personally, I would lease the car due to it being cheaper and pre-purchase the miles according to your low-end driving estimate (22k mi/yr) and if there’s overage, it’s only 5c/mi extra (So if you drive 25k instead of 22k that’s 3k mi @5 cents = $150/yr extra). I think it makes more sense to not pre-pay miles that you are likely not going to use unless you just want the piece of mind and are willing to pay for it.

One of the big benefits of leasing is that you don’t have to bother with trying to sell the car at the end and you can just turn in the keys. It would make sense to give yourself that option to do so if you so desire, especially if it’s ultimately cheaper to go that route. Who knows, 3 years is a long time, maybe your work/life circumstances change and then it’s an easy out.

Here’s another thing to consider – if you have any sort of accident or other issue that results in an insurance claim on the car during the lease period, you don’t have to worry about any sort of depreciating value on the car and can just turn it in at the end of the lease. You don’t have that sort of insurance with an outright purchase.


When is the pre purchasing of miles deadline? W BMW you can pre purchase 1 day before lease end. So just keep your money and buy just what you need.


Prepaid extra mileage 20 cents/mile seems higher than normal. What is the overage mileage charge is if you went with 15k/year and paid at the time of return.

The more I think about it, this might be the better option. I am in a self employed job where over the next few years I may be driving significantly less. If my overage is 7000 miles, then pre-paying ($0.20) would cost $1400. Paying at the end would be $1750, which is a $350 difference which isn’t that much, especially with the uncertainty of how much I’ll be driving.

@Soco15, I’m in a similar situation now in Nov 2019, and I must ask, since this was 2 years ago, and you might have gone over this issue already.

First of all. Did you end up leasing it? If you did, I have 2 questions:

  • Most cars have like major maintenance at 30K, 35K, or I don’t know 45K miles. Since you were leasing it, were you responsible for this cost? was it expensive on a Volvo?

  • Also, most cars have a warranty that might expire let’s say at 36K, which you might have reached before year 2 of the lease. So you would go for a whole year before a warranty?

Your experience on this, will probably help tons on my decision. Are you ready for your next lease? regret this one? would do it again?

Thank you,


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You are bumping a really old thread and asking questions to a user who hasn’t signed back on here in over 2 years?