I admit, I have a sickness – I have a difficult time holding on to a car. I drive about 20,000 miles a year (work & personal), and am realizing after looking at the trade in value of my 2017 Passat, that I will get slammed on depreciation if I want to get something different now. So, I have started to try to learn from this site and see if leasing would work for me. I know the least expensive option would be to buy a car I am happy with and drive it for 200,000+ miles, but as I mentioned, I have a sickness…
I have read about these GREAT lease deals for under $200 a month, but I realize they only include 10,000 miles a year. How do I figure out a monthly payment for 20,000 miles per year, and if leasing would be a good fit and work for me?
Here is my limited understanding so far, but I have not been able to figure out any answers:
Owning Cost = Depreciation between purchase price and trade price + Fuel Cost (depending on the car)
Leasing Cost = Monthly lease payment (I could do 1 time total pay) + Fuel Cost (depending on the car)
I am guessing insurance, and maintenance would basically be the same between own and lease if I only hold on to a car for around 2 years. I am thinking that repairs would also not be any different between own and lease because of each being under warranty. I don’t completely understand how tax and fees would work between leasing and owning – I live in central Illinois, so I am guessing it’s bad either way – Ha!
Thanks a BUNCH in advance for your teaching, information, and advice.
While it’s possible to lease a car for 20,000+ miles a year, you’re never going to find as good of deals as you see on this forum. Typically, most leases are capped at 15,000 miles and people even pay a premium for that, so going to 22,000 or so (since you need more miles than you actually drive) you’ll be paying a premium on top of the premium.
So, is leasing a good fit for you? Highly unlikely.
As to the rest of your questions: you’re forgetting interest charges in your costs. Unless you’re leasing from a company that allows security deposits, you’ll never hit the 0% APR that you can find when you buy.
Also, Illinois taxes aren’t actually that bad for cars.
Highly suggest finding CPO vehicles - 2-3 years old - and driving them for as long as you can tolerate. That said, with the mileage you drive, you are always going to take a significant hit at sale time. The goal should be to minimize the depreciation hit.
There’s an app called Honcker that lets you spec a lease up to 18,000 miles. For some of the cars I have been looking at the price for 18k was about $80 more per month than 10k. so if a 20k+ mile lease even exists you will probably be looking at over $100 per month more than 10k.
I am kind of like you and might lease now that I am moving 9 miles away from work. But I’ve only had my car for a year, I planned on having a beater and a sports car that I purchased. Well I regretted the sports car and took a hit on it (tip: don’t buy a used sports car). So I want to trade my beater in for a nice lease.
If you are set on leasing I would keep a cheap backup car handy…
28firefighter - So, find a lower mileage car that is 2-3 years old that takes a big hit on depreciation in the beginning, and then hope that the next few years do not loose much on depreciation. (Honda and Toyota, other brands?)
I’m thinking lower than average miles because I would put more than average miles on over the next couple years, so after owning it for a couple years, it would still be about average miles when I sell, right?
Since I drive higher miles, I have researched hybrids and noticed that their values tank in the first 5 years, so a couple year old hybrid might be a good fit and value? The older hybrids are not as efficient as the upcoming Honda Insight though…
I think that probably makes the most sense. I would also say that given how many miles you drive, you should get something that you actually enjoy so that you don’t feel like you need to flip it constantly. For instance, I’d never be happy spending 20k miles a year in an old Prius. That’s just me.
Another option is lease 2 cars at 12k/year and split your mileage between them, but then you have insurance etc on two cars.
OR … may be hunt for extreme mileage leases with 12 or 15 months left on Swapalease. Im sure the shipping you will pay from anywhere in the US will still end up cheaper on the long run of all depreciation negatives.
You definitely shouldn’t be buying new and you certainly shouldn’t be leasing. Get a CPO Lexus. It has an unlimited mileage warranty and they are very reliable. You shouldn’t take too much of a hit on depreciation
Azure - I installed and tried Honcker, but it said that there are no vehicles in my area, and it won’t even let me change anything to try to search outside of my area, so I wasn’t able to use the app for any information. If I lived near Chicago, it might have worked - Thanks for the tip though.
Depending on your financial situation, how about leasing 2 cars with 10k mile leases? Weekend/Week car? Example. People were leasing the Encore for $78/mo in TX. You could have 2 for about $160/mo. The only thing to keep in mind is insurance, and it still might be cheaper than a 20k mile lease.
Ex: $400/mo Jag F-type + $150/mo alternate car
or… Some of the BMW deals that someone puts up occasionally. I saw a $239/mo X3 lease. Or as Mani mentioned taking over a lease with high number of miles left.
Many examples on Swapalease - $279/mo with 7 months left with around 2200 miles per month available.
I personally like the idea already mentioned of buying a cheaper car to put the majority of miles on and then leasing something you like more to drive 1-2 days a week and for going out on weekends. Then every 2 years swap the lease and keep putting miles on the used civic/corolla/whatever.
totally doable but it depends on your payment objective.
for example my 15k lease on a 30k equinox is 248 with no money down on a 24 month lease.
when i add the additional mileage (again depends on brand) it’s $0.20 prepay per mile. 5000 extra per year so 10,000 miles extra on the lease is $2000 lower to the residual. takes the payment to 340 on the 24/20k lease.
total lease cost 8160
now on a purchase, lets say 3.99% with 72 months, which is standard on a 30k vehicle, you’re paying 422 a month. the out the door was 27k plus interest it’s about 30k out the door by the end. high mileage destroys new vehicle values (lesson learned with my charger, never again).
now… this depends on the car and rebates. so if i take a silverado for example, the lease is much higher and you’ll end up paying more than sticker if you lease then buyout or if you do high miles. you need a car with an inflated residual value to have a small payment and do not buy out at the end.
then there’s the world of electric cars which you get the federal rebate which exceeds the factory rebate, so you’re better off buying it if you drive high miles.
No need to lease 2 cars. Lease one car that you like for 15k/24. Before 30k is up which is close to 18 months based on your driving habit, look for another lease deal, pull ahead or whatever great deal is out and return your leased car paying remaining lease and early termination fee if any or check carmax. Still cheaper than getting 2 lease from the get-go plus insurance. And you dont have to worry about the 30k inflated $$ maintenance dealer try to sell you or put new tires. Now if you drive 30-40k a year then thats a diff story.
