If you enjoy driving a new car every few years but are concerned that leasing will not work because you will exceed the typical mileage limits, you should consider a high-mileage lease. High-mileage leases may have a higher monthly payment, but they allow you to drive more miles than a standard car lease. Read to know more.
What is a high-mileage lease?
Most car leases have mileage limits, which range from 10,000 to 15,000 miles per year. Going over your mileage limit can be expensive, with fines typically ranging from 10 to 25 cents per additional mile driven.
If you know you’re going to exceed your mileage allowance, some lessors will let you negotiate a higher mileage cap in what’s known as a high-mileage lease. Remember that a high-mileage lease will typically cost you more money.
However, the increase in your monthly payment may be less expensive than the excess mileage charges. Some lessors may even promise to reimburse you for the extra miles if you do not use them.
Buying vs. Leasing
Both purchasing and leasing a new vehicle have advantages and disadvantages. The best option is determined primarily by the individual’s personal preferences and driving style. If you want to drive a new model every two or three years, a lease is probably your best option. Similarly, buying is probably the best option if you simply can’t get past the feeling that you don’t own the vehicle you’re driving.
Another important factor that is frequently overlooked is mileage. Drivers who plan to spend a lot of time behind the wheel may believe that leasing is the best option, believing that it is better to put a lot of miles on a vehicle that they will be turning in soon and won’t have to worry about. Standard leases, on the other hand, have annual mileage limits, and exceeding the limit can result in significant additional fees.
Mileage limits explained
Most standard auto leases have a mileage limit of 10,000 to 15,000 miles per year, with most having a limit of 12,000. According to data from 2018, the average American driver puts 13,500 miles on their car each year. This means that a standard auto lease works well for most people.
If a driver goes over the number of miles allowed per year, they have to pay an extra $0.10 to $0.25 per mile. That might not sound like much, but if you go over the mileage limit for the year by a lot and do it often, your lease costs can go through the roof.
About high-mileage leases
A high-mileage lease has a higher mileage limit from the start, usually between 18,000 and 20,000 miles. So, the renter can drive more miles per year without having to pay those expensive per-mile fees for going over the limit. The catch is that you will have to pay more each month for your lease.
A high-mileage lease is worth it in case of a trade-off between higher monthly payments with a high-mileage lease and higher per-mile fees with a standard lease. With a high-mileage lease, you will save more the closer you get to the mileage limit.
On the other hand, if you think you will only go over the mileage limit of a standard lease by a few hundred miles, you are probably better off with a standard lease and paying the extra per-mile fees.
Advantages of high mileage leases
A high mileage lease is a contract with a higher number of miles driven each year than a normal auto lease. A high mileage lease costs more, but you get to drive your car more often than you would with a standard lease. Edmunds says that it’s easy to get a high mileage lease, and it can be helpful for people who drive more than most people.
When is a high mileage lease a bad idea?
Not everyone should get a lease with a lot of miles. If you don’t think you’ll go over the mileage limit on your lease, you don’t need a high mileage lease. You might be more interested in a standard lease instead. Just keep an eye on how many miles you’ve driven.
Another problem with a high mileage lease is that you might be upside down or underwater. When you are underwater or upside down on an auto loan, you owe more on the loan than the car is worth.
What it means to buy an extra mileage car lease
When you buy an extra mileage car lease, you are buying a lease that gives you more miles than a regular car lease. If you plan to drive 20,000 miles per year, you need a lease that lets you do that. Some leases limit the number of miles you can drive each year, which can mean you have to pay extra fees.
If you choose a lease with a high mileage limit, you can drive as much as you need to without having to pay extra. This option might be cheaper. But you should also consider the cost and the following:
- Market value of the car
- Initial costs
- Monthly lease
When you think about all of these costs, you can decide if an extra mileage lease is the best choice for you. The value of a car goes down as you drive it more miles. If you drove your car 70,000 miles a year for three years, that’s 210,000 miles. This would mean that it has no real worth. In this case, it would make more sense to buy a car than to lease one.
How to get a high-mileage lease
Most major dealerships have one or more high-mileage lease options, so simply ask for one. However, availability is subject to a variety of factors, including model and geographic location. Make certain that you have taken the time to estimate the number of miles you intend to put on the vehicle each year as accurately as possible and that you clearly understand the terms of the proposed lease. Before you sign up, you should definitely run the numbers through your calculator.
How do you evaluate an extra-miles lease deal?
The first step in evaluating an extra-miles lease deal is to request numbers from a dealership. They can provide you with the monthly payments for a standard lease and an extra miles lease.
You can determine which option is more cost-effective for you based on your anticipated mileage. An extra-miles lease has both advantages and disadvantages. Among the benefits are:
- Reduced cost per mile
- Pay for your miles in cash
If you need more miles as part of your lease agreement, these extra miles are less expensive. If you drive frequently, this option could save you money. Some lease agreements allow you to pay for your miles as you go, ensuring that you are not overcharged. Many lenders will allow you to pay for your extra miles in cash as part of your down payment. They can even reimburse you for unused miles.
However, if drivers drive their leased vehicle past the warranty period, they must pay for repairs out of pocket. If the warranty expires, drivers may be required to pay for repairs on a vehicle they do not own.
Consider how many miles you drive when deciding whether or not a high mileage lease is right for you. If you believe you will exceed the mileage limit on a standard lease, this may be the best option for you.
High-mileage leases and extended warranties
Another thing to think about is purchasing an extended warranty for your new or recently leased car. Assume you sign a three-year, high-mileage lease on a brand-new vehicle with a three-year, 36,000-mile warranty.
That equates to 12,000 miles per year, which means that if you plan to drive your vehicle more than that—which is what a high-mileage lease is for—you will have some time during the latter stages of your lease when the vehicle is out of warranty.
That means you’ll be responsible for any additional repair and maintenance costs, which could add up given the vehicle’s high mileage by then. It’s a compelling reason to pay for the extended warranty upfront.
Not sure if a high-mileage lease is for you? Consider these alternatives.
When you lease, you’re primarily paying for depreciation, which can quickly add up if you drive frequently. If you travel or commute frequently in your car, you may want to avoid leasing altogether. Instead, consider purchasing the car and driving it until you’ve built up some equity.
Buy the car instead
Even if you know you’ll need a new car in a few years, buying may be a more cost-effective option than leasing.
For example, suppose you expect to drive your car 20,000 miles per year and the high-mileage lease would cost you an extra $6,000 over the life of the lease. Use Kelley Blue Book’s car value calculator to see how those miles may affect the car’s depreciation. If the additional depreciation is less than $6,000, the high-mileage lease is too expensive.
In this case, you might be better off financing the car and setting aside money each month to cover the difference between what your car is worth at trade-in and what you owe.
Purchase your car lease
Your lease contract may include an option to purchase your vehicle from the dealership at the end of the lease. In that case, if you’ve accidentally driven more miles than you were permitted, you can avoid paying excess mileage fees by purchasing your vehicle outright.
Of course, if you’re dead set on getting a new car, this won’t work. However, if you fall in love with the vehicle during the term of your lease, you’ll get the added benefit of avoiding expensive mileage charges while keeping the car you really want.
Consider whether the lease fits your budget and lifestyle before signing it. Consider how many miles you drive in a typical year, how frequently you think you’d like to buy a new car, and how much monthly payment you can afford.
After considering all the factors, you may decide that a high-mileage lease is a good option. Make sure, as with any financing decision, that you shop around for the best deal.
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