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My wife and I are currently leasing a 2010 Prius with the lease up this summer and dealerships trying to buy our lease early for starting a new lease. We have 36,000 miles allotted for the current lease. I currently commute 26 miles roundtrip/day, and we're considering moving somewhere that'll bump my commute time up 15 additional minutes but up to 64 miles roundtrip/day. I'm trying to figure out if the expected mileage alone from the new residence should have us reconsider a new lease altogether, pre-pay for miles on a new one, or what our best bet is from there. Assuming 64 miles/5 days and 30 miles total over weekends (though it'll certainly vary), that puts us above 20,000 miles/yr. From one recent foray into turning our lease early to the dealership from which we got it, they made it clear they were willing to ignore the mile overage we already had (38,000 with 6 months to go), but I don't imagine a dealership would disregard a 8,000 mi. overage per year. Would it be smart to just buy out our lease at the end of the term?
To be clear, we're leasing because we like the idea of a new car every 3 years.
Does GAP insurance, coupled with purchasing the next lease from the dealer we approach, make it any more likely they could forgive 10-15k mile overage, assuming we'd turn it in 6-9 mo. early?
My wife and I are currently leasing a 2010 Prius with the lease up this summer and dealerships trying to buy our lease early for starting a new lease. We have 36,000 miles allotted for the current lease. I currently commute 26 miles roundtrip/day, and we're considering moving somewhere that'll bump my commute time up 15 additional minutes but up to 64 miles roundtrip/day. I'm trying to figure out if the expected mileage alone from the new residence should have us reconsider a new lease altogether, pre-pay for miles on a new one, or what our best bet is from there. Assuming 64 miles/5 days and 30 miles total over weekends (though it'll certainly vary), that puts us above 20,000 miles/yr. From one recent foray into turning our lease early to the dealership from which we got it, they made it clear they were willing to ignore the mile overage we already had (38,000 with 6 months to go), but I don't imagine a dealership would disregard a 8,000 mi. overage per year. Would it be smart to just buy out our lease at the end of the term?
To be clear, we're leasing because we like the idea of a new car every 3 years.
Does GAP insurance, coupled with purchasing the next lease from the dealer we approach, make it any more likely they could forgive 10-15k mile overage, assuming we'd turn it in 6-9 mo. early?
GAP only covers the difference in what the car is worth, to what you owe if you were to get into an accident and total the car. I don't think GAP would protect you from overages on your mileage
from wiki
GAP Insurance is also known as Guaranteed Auto Protection or Guaranteed Asset Protection and as GAP within the North American financial industry. GAP insurance covers the difference between the actual cash value of a vehicle and the balance still owed on the financing (car loan, lease, etc.). GAP coverage is mainly used on new and used small vehicles (cars and trucks) and heavy trucks. Some financing companies require it.
GAP insurance covers the amount on a loan that is the difference between the asset value and the amount covered by another insurance policy. Some GAP policies also cover the deductible. This coverage is marketed for low down payment loans, high interest rate loans and loans with 60 month or longer terms. GAP insurance is typically offered by a finance company at time of purchase. Most auto insurance companies offer this coverage to consumers.
Last edited by Me007gold; 02-20-2013 at 08:14 AM..
What does the lease charge for overage miles? Ten cents? Thirty cents?
At ten cents, an 8,000 mile overage is $800; at thirty cents, its $2,400. I'd think about this final cost and see if a lease with a higher mileage allotment works better.
What does the lease charge for overage miles? Ten cents? Thirty cents?
At ten cents, an 8,000 mile overage is $800; at thirty cents, its $2,400.
The extra miles will be minimal in depreciation.
I was just about to ask about your math until you fixed it. If we turn it in 6 months early and thus put on an extra 20,000 miles, that's $2,000 (if we prepay, I believe, to get the $.10 rate). That's not minimal. That's about $55/mo. If we get a 15,000 mi./year allowance, it becomes about $41/mo. if we see the lease to full term. Otherwise, at 6 months remaining and turning it in, it would re-adjust to 12,500 total overage, $1250 charge, $34/mo. equivalent.
The question then becomes, how MUCH mileage will a dealer likely forgive? What's their max, that we should just account for paying the difference?
Dealers dont forgive anything, they just make it up somewhere else.
I worked in auto finance for a few years, and this is my speech on leasing to friends:
1. Don't do it.
2. If you absolutely insist on making a bad financial decision, understand the following...
Never put a dime down in a lease. A down payment on a lease is prepaid rental payments, and that is all it is. You want an honest idea of what its costing you, don't put a dime down. You want to fool yourself, and brag that you pay $299 a month, fine, waste money and do a down payment.
Understand how much you drive, and contract for more mileage. You swear you drive 11k a year, and always have? Get a 15k mile/yr lease. Why? Because in the real world, the above scenario happens every day. It's rare for someone to turn in a lease car way under mileage.
Be prepared for a nice bill when you turn in it. They will notice all the scratches, etc., and they will fight you to the death for those expenses. Its either coming out of your wallet, or theirs. Try to get a salesman to open his wallet for you, see how that works out.
Early buyouts, etc are just like turning a car in upside down, which is what you thought you were avoiding by being so smart and leasing. You are asking them to absorb money into a new deal...same thing. If you are going to do that, just buy.
Dealers dont forgive anything, they just make it up somewhere else.
I worked in auto finance for a few years, and this is my speech on leasing to friends:
1. Don't do it.
2. If you absolutely insist on making a bad financial decision, understand the following...
Never put a dime down in a lease. A down payment on a lease is prepaid rental payments, and that is all it is. You want an honest idea of what its costing you, don't put a dime down. You want to fool yourself, and brag that you pay $299 a month, fine, waste money and do a down payment.
Understand how much you drive, and contract for more mileage. You swear you drive 11k a year, and always have? Get a 15k mile/yr lease. Why? Because in the real world, the above scenario happens every day. It's rare for someone to turn in a lease car way under mileage.
Be prepared for a nice bill when you turn in it. They will notice all the scratches, etc., and they will fight you to the death for those expenses. Its either coming out of your wallet, or theirs. Try to get a salesman to open his wallet for you, see how that works out.
Early buyouts, etc are just like turning a car in upside down, which is what you thought you were avoiding by being so smart and leasing. You are asking them to absorb money into a new deal...same thing. If you are going to do that, just buy.
Can you explain the difference between the dealer purchasing our lease and us getting a new lease from them, vs. turning the lease in early. I'm not sure I understand.
I have never had an issue with leasing.. Granted, the last lease we did was back in 07, so things might have changed.. Up until that point we had leased 7 cars of which 4 of them we traded in on a newer model of the same car, or went with the same brand.. Every car we traded in was over the mileage allowance.. IF we traded it in on something else with that same dealer, we never got hit with anything.. Miles, condition, etc. Granted I do take care of the cars.. The other 2 we traded in at another dealership (BMW) and it was worth more still than what we had left as the residual or balance, so it was just paid off just like any other conventional loan..
The last one, I sold outright to a private party who paid more again, over what I had left on the lease.. We never had an issue with leasing.. The only time that I would see people getting dinged for mileage and condition is when you walk in, drop the keys and walk away.. They want your future business, if you buy through them again, they can look past the other things..
I have never had an issue with leasing.. Granted, the last lease we did was back in 07, so things might have changed.. Up until that point we had leased 7 cars of which 4 of them we traded in on a newer model of the same car, or went with the same brand.. Every car we traded in was over the mileage allowance.. IF we traded it in on something else with that same dealer, we never got hit with anything.. Miles, condition, etc. Granted I do take care of the cars.. The other 2 we traded in at another dealership (BMW) and it was worth more still than what we had left as the residual or balance, so it was just paid off just like any other conventional loan..
The last one, I sold outright to a private party who paid more again, over what I had left on the lease.. We never had an issue with leasing.. The only time that I would see people getting dinged for mileage and condition is when you walk in, drop the keys and walk away.. They want your future business, if you buy through them again, they can look past the other things..
Just our experience..
Did they sneakily roll over mileage penalties into the new lease? How much over the allowance were you? Among other things, I'm trying to figure out if there's some rough threshold of overage they'll forgive, if they truly forgive.
No, they did not. I have purchased 45 cars over the last 12-15 years, so I know what to look for.. If I traded in for the same vehicle and or brand, traded in on a different vehicle or brand or if I sold it outright before the lease was up, we never got penalized..
Only time we were going to get hit was if we would have walked in, dropped the keys on the counter and left.. They want the residual business, so there are things they can look past. Granted, we probably were only over 7-12K miles at the most so that could have something to do with it..
Like I said, things might be different now in this economy, etc.. so your experience may vary..
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