I just started a lease, 36 month 15k miles per year. I know I’ll need more than the total 45K miles, but I have another car I own to spread miles out on. My question is this, based on my calculation, when dividing my total payments over 36 months by 45K miles, I get 20.5 cents per mile. My lease terms say that each mile over 45K is charged at 20 cents.
Based on this, financially speaking, is there any reason why I wouldn’t just exceed the miles and pay the 20 cents per? Am I missing something like if I’m 10k over the miles they’ll tack on some crazy wear and tear in addition to the 20 cents per mile? Are the 20 cents per mile taxed?
This is my first lease and any advice is appreciated.
If it matters, my out the door was $2,137 and my monthly is $203. All numbers are including tax. I calculate a total of $9,262 over 3 years which works out to 20.58 cents per mile.
A question I have would be is the $.20 a mile overage inclusive of tax? I think it isn’t and I expect you would be charged your sales tax rate on it. The $.2058 you’ve calculated is a loaded number including taxes and fees, right?
Yes, the .2058 number is inclusive of tax. One of the questions that will impact the analysis is if the $0.20 per mile over 45K in my lease agreement will be taxed. Anyone know?
It depends on where you’re located, but in a lot of places it’s taxable (I believe including CA for example).
Regardless, let’s say you pay even 10% tax (unlikely), that makes it $0.22/mile, still not a big deal, right? Does it matter if it’s higher or lower than your baseline charge? It’s comparable.
Thank you. My CA tax rate is 7.75% making the excess mileage $0.215 per.
You’re right, in the grand scheme of things, it is within 5% of my baseline charge. Doesn’t really matter, but just a comparison to a baseline. Thanks.
Yeah, the risk, other than tires and brakes, is that you go out of warranty and are faced with a major repair - not a huge risk, but something to consider.
