advice: too many miles on lease

[pittdoc]

hello,

so I have the standard 39 k lease. However, with my new job, Im raking in 1000 miles every 2.3 weeks or so. I have calculated, at the minimum, I will be at least 10000 miles over if not more when lease is over. There is a potential of 20K over too.

what should i do? I have heard some people tell me the dealer will waive the extra 15 cents per mile charge if I get another car from them. I dont know how true that is, plus that sort of limits me to nissans again. I could buy the car outright right now, I guess

any advice?

thanks!

[HVT]

I've leased Nissans before and have never known them to allow over mileage even if buying or leasing another new Nissan but that may be a dealer thing I don't know. The one and only time I leased I too went over and I just bought it at the lease end and traded it a few months later. If you buy it, there's no penalty for mileage....you could have 100k over and it doesn't matter. You'd have to see the cost difference between paying for the extra mileage and doing what I did. I wanted to keep my vehicle too so the decision to buy it out was an easy one. If you're wanting out though, you may think differently.

[Dunbar]

I can't see a dealer waiving 10,000 mile overage. Just buy it and resell if you run the numbers and it's significantly cheaper than paying the overage.

[Wallybear]

Hey,
For what it's worth, my advice is the same as the other kind reponders here: you really have no logical choice if you keep the car until the end of the lease period except to buy the car for the agreed-upon (lease-end) price. The idea that you'd pay a huge mileage charge is just about as crazy as the notion that a dealer would somehow have a "kind heart" and just eat the loss. There is one other possible out-option for you, but I would like to babble on about the facts of a lease for a minute or two before I mention it. Bear with me, please.

The "facts of the leasing life" are these:

1- A lease is a rental period for an agreed-upon amount of use (i.e., miles). The residual value is based on that usage amount set at lease inception. In other words, you are agreeing to pay for a certain amount of use over a set amount of time. If you exceed that use, you have agreed to pay more (sometimes lots more) because that's how the leasing business works. If you guess wrong on usage at the start of a lease, you are the loser, not the dealer. If you keep the car for the entire lease period, then the only "out" of the deal is to buy the car for the residual price. As the other posters have pointed out, you can try to get as much as you can for the car on the used market, because it now belongs to you. The extra use that you "used up" by driving 10,000 miles more has to be paid for, in this case when you sell the car for less than you paid for it.

2- If you can't guess pretty closely in terms of mileage that you will need in a lease, then you should not lease a car. The whole idea of a lease is that it is a rental for a given time for a given amount of use. It is not ownership of the car, so don't confuse the two. The leasing company (or manufacturer) owns the car, not you. Think of it this way: if you were the person who was leasing out a car you owned to someone to use, you'd not be too happy when they brought it back with lots more miles on it. You'd be mad I'd expect if there was not some consequence written into the deal. The consequence is that 15 cents a mile.

3- The only way anyone "wins" in terms of mileage in a lease is if the customer (that's you) drives way under the planned mileage. The winning party is the leasing company because the deal does not give you anything except the option to buy the car for a set price. If you've underused the car, you might be able to buy it and then sell for a profit because it's got low mileage. But, that's not what usually happens. What happens is most people will drive the low-mileage car in to the dealer and then lease another one, thus giving up the extra value that might be realized by buying and then selling the leased car. Why? Because a lease is all about convenience....just like renting a car at an airport when you're traveling. It is not convenient to buy a leased car then try to resell it.

OK. Thanks for your patience.....here's another idea you might consider. In fact, you mentioned it yourself at the end of your post: you can buy out the lease right now. Almost all leases work this way now (I won't explain those that differ). Say you have used 12 months of a 36 month lease and you've used up 50% of the miles. You find that you expect that you'll be way over your mileage allowance when you get to the 36th month. One possible remedy is to buy out the lease just like you'd do if you were trading in a car that you were buying; i.e., if you had a bank loan on to buy). In many cases, buying out the lease will put you ahead because it has these advantages:

1- You get to walk away from the expected mileage charges because you never actually incur them (i.e., you do not keep the car for the whole lease period). This magic will work better the less "overage" miles you incur....so don't wait any longer....call the leasing company and ask what the buy-out is. You may find that the buy-out is close to the actual value of the car (i.e., the car will be valued as any used car would be, so if you've damaged it or otherwise subjected it to hard use, its value will be lower).

2- You can roll over any deficit (in terms of buy-out cost versus current used value) into a new lease or purchase (except remember this: with the kind of mileage you are driving, you should NOT be leasing a car).

3- There is no penalty for buying out most closed-end leases....that is, I've never seen one in a lease that's offered by a manufacturer. However, if you leased from a leasing company (a third party such as a dealer who buys the car from the manufacturer and then leases it to you), then you may have some higher costs as there are many ways to write a lease that is legal in most states but which adds penalties that a manufacturer would never add into their leases (becasue they want you back as a customer whereas the leasing company could care less if you came back).

So, my advice is that it wouldn't hurt for you to check on the buy-out cost for your situation. You may find that buying out a lease as early as possible is the smartest thing for you to do because the numbers often add up in your favor after the first year or so into a lease. The closer you are to the end of the lease, the less this option makes sense. In short, you need to turn your lease into a purchase which is what you should have done in the first place (that is, assuming you'd ahve known about the over-mileage thing from your job). There is no such thing as a "good deal on a high-mileage lease"; in fact, the higher the mileage you pay for in a lease, the more you should be buying the car. The best residuals and money factors come from low-mileage leases....high-mileage leases are pure money makers for the leasing company.

I hope this info helps. Sorry if it's too long-winded, but I like to be clear when I'm talking about money.

Oh, and yes, I do have some insider knowledge of the leasing business.

[HVT]

LMAO...I love your posts Wally! You seem very friendly, helpful and on the ball so it's with friendly laughter and ribbing that I'll say to you exactly the way I say it to my wife at times.. "STOP CIRCLING THE AIRPORT AND LAND THE DAMN PLANE!"
I've seen a couple of your informative posts and I have to give you credit....my fingers would hurt if I typed that much! lol
However I agree with you and your points have been my experience as well.

[Halwg]

I totally agree with Wallybear's post. Leasing is not a good option for the vast majority of folks out there, and the leasing companies know this. The biggest driver is that people get sucked into the idea of getting a nicely equipped car for less of a monthly payment than buying the same vehicle.

But as Wally says, you are only "renting" the car, you don't own it, and there are stiff penalties for over mileage and for what the leasing companies consider out side the norm for wear and tear. I'd buy out the lease as Wally suggests, and then when it comes time to trade, look at a purchase of the next vehicle.

[pittdoc]

when i leased the car, i wasnt even putting on 100 miles a month...i was in school and then local job

but this opportunity came up that really will advance my career, but I need to drive a lot.

my only concern is that Im not sure I want to keep this car longterm

[HVT]

Hey the job comes first. Worry about the car second. Congrats on the new job opportunity.


Sent from my Autoguide iPhone 4S app

[pittdoc]

let me be more clear on my driving:

most of my driving in on the weekends where I have to go to different locations (-500 mi approx)....the weekday drive consists of me going from temporary assigned housing to job and back, these two are always close to each other. So that drive is always cold engine driving. In addition, I always get outside parking under trees, so the car gets hit with sap. Im also in the snow belt, so salt in the winter time is also a issue

I dont mind paying a fine, I Just want to see what the best option is

A friend of mine told me to keep the car, rack up the miles, and just let it have the wear and tear and pay the mile fine at the end....I will probably be moved to a different job at the same time the lease ends

From the almost exclusive cold engine driving in the weekday, to being hit with tree sap/salt, Im inclined to let this car take the wear and tear and just pay the fine

[HVT]

Then talk to the dealer and ask THEM what they think. If they say they'll eat the extra cost if you lease another from them (doubt it) then you'll know. Either way, whatever they tell you, you'll then know what you need to do.

[Wallybear]

I shall stop circling and land the plane in a jiffy this time.

No dealer is going to agree years (and thousands of miles) ahead of time to "eat" the overage on a lease. That's just a fantasy, wishful thinking, or more to the point--it's a ride down the river of denial. (Is this your first new car and/or new lease as well as a new job?)

And hey, you keep mentioning "the dealer." Does a new car dealer actually hold your lease (i.e., is your contract from a business entity of the dealer that leases the cars sold by the dealer)? Remember, you are renting from the owner of the car and that's the leasing company. In my experience, the leasing business is quite separate from the new car business, even if the same guy or family owns both. In other words, both businesses have to make money independently of each other.

Considering all the extra information you've given in your recent post (as well as my assumptions about certain other aspects of your situation), I can offer this advice: listen to my previous advice and try to buy out the lease such that you will be paying for a regular loan to buy this car.Why? Here's why....considering all the extra wear and tear you're expecting (salt, sap, crap, etc.) you're going to be facing a lot more than the over-mileage charge. You're going to be facing the cost of that extra wear and tear. Buying out the lease now will at least mitigate the cost of the over-mileage charges (which at 15 cents a mile, is an extra $1500 each 10K miles). With lots of wear and tear, the leasing company could easily hit you for extra thousands of dollars (I have seen that happen and I've seen the shocked look on many a customer's face when it does). It's time for you to dig out that leasing contract and actually READ it. Look for the clauses about "wear and tear" and "end of lease" obligations...you'll see that you have agreed to keep the car almost like new...with good tires, no damage, no paint or glass dings....a whole lot of details are in every leasing contract I've ever seen. And the more nefarious the leasing company, the more nit-picky they will be about those "wear and tear" charges. From your last posting it seems you have imagined that all that is at stake is the over-mileage charge. Not true. Not true at all!

I may be assuming too much (and if so, I apologize), but you seem to be stuck in the idea that the dealer (or whomever owns the car) will simply smile upon you like a indulgent father and say, "Ah, what the heck, you're a nice kid....I'll eat the extra $5000 you owe me." If that's what ends up happening for you, please send us all a telegram from Mars because you have about as much chance of getting there in your rented car as you doing finding a dealer who is going to treat you like an indulgent father.

This is just my 2-cents of reality for you...and I don't know what you'll do with my opinion (after all, what the heck do I know...I'm just another faceless poster on this forum). But I will add this idea as I land the plane: if what I've said here seems too hard for you to believe (i.e., you're really stuck in your fantasy), then all I can say as a final word to you is "good luck when you get to the end of your lease." Perhaps things will work out the way you are imagining that they will...perhaps I'm just "full of it" and don't know what the heck I'm talking about.

Oh, but did I happen to mention the last time that I really (and I mean deeply and rather intimately) know the car leasing business very well?

Yeah, I think that I did.

Peace and good luck! Let us all know how things work out for you

[pittdoc]

Originally Posted by Wallybear

I shall stop circling and land the plane in a jiffy this time.

No dealer is going to agree years (and thousands of miles) ahead of time to "eat" the overage on a lease. That's just a fantasy, wishful thinking, or more to the point--it's a ride down the river of denial. (Is this your first new car and/or new lease as well as a new job?)

And hey, you keep mentioning "the dealer." Does a new car dealer actually hold your lease (i.e., is your contract from a business entity of the dealer that leases the cars sold by the dealer)? Remember, you are renting from the owner of the car and that's the leasing company. In my experience, the leasing business is quite separate from the new car business, even if the same guy or family owns both. In other words, both businesses have to make money independently of each other.

Considering all the extra information you've given in your recent post (as well as my assumptions about certain other aspects of your situation), I can offer this advice: listen to my previous advice and try to buy out the lease such that you will be paying for a regular loan to buy this car.Why? Here's why....considering all the extra wear and tear you're expecting (salt, sap, crap, etc.) you're going to be facing a lot more than the over-mileage charge. You're going to be facing the cost of that extra wear and tear. Buying out the lease now will at least mitigate the cost of the over-mileage charges (which at 15 cents a mile, is an extra $1500 each 10K miles). With lots of wear and tear, the leasing company could easily hit you for extra thousands of dollars (I have seen that happen and I've seen the shocked look on many a customer's face when it does). It's time for you to dig out that leasing contract and actually READ it. Look for the clauses about "wear and tear" and "end of lease" obligations...you'll see that you have agreed to keep the car almost like new...with good tires, no damage, no paint or glass dings....a whole lot of details are in every leasing contract I've ever seen. And the more nefarious the leasing company, the more nit-picky they will be about those "wear and tear" charges. From your last posting it seems you have imagined that all that is at stake is the over-mileage charge. Not true. Not true at all!

I may be assuming too much (and if so, I apologize), but you seem to be stuck in the idea that the dealer (or whomever owns the car) will simply smile upon you like a indulgent father and say, "Ah, what the heck, you're a nice kid....I'll eat the extra $5000 you owe me." If that's what ends up happening for you, please send us all a telegram from Mars because you have about as much chance of getting there in your rented car as you doing finding a dealer who is going to treat you like an indulgent father.

This is just my 2-cents of reality for you...and I don't know what you'll do with my opinion (after all, what the heck do I know...I'm just another faceless poster on this forum). But I will add this idea as I land the plane: if what I've said here seems too hard for you to believe (i.e., you're really stuck in your fantasy), then all I can say as a final word to you is "good luck when you get to the end of your lease." Perhaps things will work out the way you are imagining that they will...perhaps I'm just "full of it" and don't know what the heck I'm talking about.

Oh, but did I happen to mention the last time that I really (and I mean deeply and rather intimately) know the car leasing business very well?

Yeah, I think that I did.

Peace and good luck! Let us all know how things work out for you

1) how am i in denial and in fantasy land when i already acknowledged I'll have to pay some sort of fine?
2) after your first post, i did not mention the word dealer in my posts after that
3) i have great tires on it that I use, the OEM tires I took off almost immediately, and would put those back at time of return
4) the car is dark in color, and I wash it once a week and wax it every 3 months, so far, i dont see much damage, is this more likely to rust more than normal? id say yes, but it wont happen at time of returning lease
5) unless the car break downs, i dont see any reason how the dealer will find out that the car on weekdays is soley driven on cold engine

[njjoe]

heavy sigh... Gone are the days when you would simply disconnect the speedometer cable and be done with it. That was back when the only transistors in the car were found in the radio and tape deck.

-njjoe

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