X5 lease - more mileage or just 12,000???

[Wardman]

Hello All,

Working on the 3 year lease now. I'm thinking 3 years at 12,000 miles a year and paying overage at the end to put down as little cash as possible, and keep multiple MSD's lower.

Any finance people out there with an opinion?

Thanks!

[chrisny]

Originally Posted by Wardman

Hello All,

Working on the 3 year lease now. I'm thinking 3 years at 12,000 miles a year and paying overage at the end to put down as little cash as possible, and keep multiple MSD's lower.

Any finance people out there with an opinion?

Thanks!

Unless you're absolutely certain you'll need more mileage, buy it at the end. It's only .01 per mile more to do that than to add it at the beginning of the lease. Don't pay for miles you may not use... They now give you until one day before you turn it on to add at .16 instead of $0.20, but even when it was 3 months before lease-end, still made more sense to wait.

[Wardman]

Thanks! Just feels so hard to do. I will do 20,000 a year - lease b/c I do not want to own for longer than close to the service/warranty period..

Appreciate the feedback!

[chrisny]

For that many miles, you may want to run the numbers on purchasing vs leasing, maybe buying CPO as well. You can always trade in at 50K if you buy. By the time you add mileage up to 20k a year, it may be start getting close to a purchase payment. Maybe not, but makes sense to run the numbers both ways with your CA and look at some pre-owned.

[Wardman]

I ran them and 3 years at 50-60,000 miles leaves the dealer in the driver seat with about break even equity if I buy... And that is about when I get the itchy trigger finger.

CPO would be an option, but the 2015's are not out there yet and the refinements appeal to me. Next time around, definitely an option.

I would have liked total out of pocket to be no more than 30K with 15,000 miles a year - but could not get there with the residuals, etc....

[42pilot]

This topic cracks me up - seriously.

When I was a driving salesman, I leased my cars because I didn't make much money but I wanted a nice car. I leased at 12,000 miles and regularly put 24,000 to 36,000 miles per year on the car. So, after 3 years, how did I get away from paying the penalty per mile? I never ever, not even once, turned in the car at the end of lease. I always traded my vehicle. Where in the lease does it state that you MUST turn it in? Where does it state in the lease that you can't trade it in?

At the end of the day, when you trade in a lease or a bank loan car, you are concerned with equity. By buying a car, you pay down the loan faster. With a lease, you are covering (hopefully) just depreciation (but not too much on luxury cars) and interest. So, as far as the bank (or leasing company) is concerned, they just want you to cover what you owe.

To prove this, call the lease company and ask for your pay off. Now, go to edmunds.com and appraise your car. Is it the same? If so, then go to ANY dealer of ANY car and negotiate - all you care about is paying off the lease.

Anyway, go for the lowest mileage and trade the car in before it's due. That way you can negotiate the best possible deal rather than the leasing company screwing you. You'll have to do the math on how long of a lease you'll need to pay down the lease to where the car's value will be at parity to the lease payoff.

FYI - I traded an Acura RL lease car that had 88,000 miles after 3 years on a Ford Explorer. It was a 4 year lease. The Ford dealer and I agreed to a trade in value, they paid the lease and I bought the new car. In this example, instead of me paying a penalty to the lease company for blowing past the 36,000 allowable miles, I paid a "penalty" for having a car with higher than normal mileage. The difference? I was in control of the negotiation, not the lease company holding a contract.

[chrisny]

Originally Posted by 42pilot

In this example, instead of me paying a penalty to the lease company for blowing past the 36,000 allowable miles, I paid a "penalty" for having a car with higher than normal mileage. The difference? I was in control of the negotiation, not the lease company holding a contract.

I've traded in my wife's last 2 cars, both about 2 years into 3 year leases, but with normal mileage. But I think you're splitting hairs a bit. You pay for that high mileage one way or another, like you said. And in doing so, give up some leverage you would have had without the high mileage trade-in (you need them too).

Probably the best way to do it is to trade it in through a pull ahead program within the same brand where they'll let you out of the last 3 to 6 months (I've seen some even go 9) of the lease and forgive the mileage. Let you out, not pay off (since the car isn't likely to be worth the buyout). Yes you can find some that will take it on trade or pay your remaining payments at other brands to earn your business, but most will just try to roll the remaining payments of the lease into the new car, or give you only their trade-in value on the car (and you pay the difference between that and the buyout). Pay me now, pay me later.. Where the pull ahead programs are basically just trying to get you to stay with their brand, so they're releasing you from the contract early and forgiving the miles, not rolling anything into your new car payments.

There is no guarantee, however, that a pull ahead will be running when you need one... I still do agree though, stick with the lower mileage and pay later, one way or another (see what your options are when the time comes).

[Wardman]

I am in sales too, lots of miles still. If I would trade my car in, someone would pay for the extra mileage or wear and tear. The term "upside down" applies to what you were doing and I have had many a friend look at big payments for running the lease into the ground and then "trading it in" for a new car. We used to say not so smart to those people, but hey, they had a nice new car with a thousand $$ payment, or went from their Honda Prelude to a Ford Escort in the process back in the day ... :-)

So lower mileage it will be - we'll see how it goes.

Thanks!