Conventional wisdom says that if you’re a high-mileage driver, leasing isn’t right for you since large excess mileage charges can be a common contract provision. It’s often recommended that these high-mileage drivers would be better off purchasing their vehicles. However, that’s not always the case. In fact, many high-mileage drivers would actually be better off leasing rather than purchasing. Both dealerships and independent leasing companies often offer higher mileage leasing options that may better suit your needs. In this article, we’ll discuss why the more miles one drives, the more likely they should be leasing their vehicle.
In This Article
Depreciation
A Common Misconception
What is a High-Mileage Lease?
Flexibility
What About the Finances?
Depreciation
With the exception of severe physical damage, there isn’t much that will depreciate a vehicle faster than mileage. Because of that, drivers who put a lot of miles on their vehicles are often put in a tricky situation. Their high usage means that they can be left owing more on their vehicle than it is worth. This isn’t as much of an issue for those who plan on keeping their vehicles for many years. However, especially in business situations, vehicles are turned over every few years. So how do you solve that issue?
A Common Misconception
To answer that question, we must first address a common misconception when it comes to leasing. If you think back to the last time you saw a vehicle lease advertised in the newspaper, on TV, or on the radio, you’ll probably remember the advertisement mentioning between 10 and 12,000 annual miles allowed, sometimes referred to as an “Ultra Low Mileage lease”. For that reason, many consumers are under the impression that those limits are all that’s available. That’s simply not the case. There’s another option available.
What is a High-Mileage Lease?
As the name suggests, a high-mileage lease is designed to accommodate drivers who utilize more miles than the average person, such as sales people out on the road, or service technicians traveling to and from clients. These leases take your high annual mileage into account by building it directly into the lease term up front. In fact, we have some clients whose leases cover 100,000 or more miles. Structuring the lease in this manner allows the individual or company to avoid any potentially costly excess mileage charges, and thus budget for years in advance.
Flexibility
One of the major advantages of high-mileage leasing is the flexibility that it provides when compared to purchasing or reimbursement. As we mentioned earlier, high-mileage drivers who purchase their vehicles or receive reimbursement from their employer are often left upside down after a few years. This leaves them in the unenviable position of either continuing to drive the vehicle until the value and amount owed equalize or paying the difference out of pocket to get out of the situation. A reimbursement or allowance program usually does not cover the entire cost of vehicle ownership. With high-mileage leases, you have more options than simply being stuck with a vehicle that no longer meets your needs or paying out of pocket to get out of a bad situation. Lease terms are generally shorter than finance terms and give you choices. With a lease, when your term is up you can purchase the remaining portion of the vehicle if you’d like to keep it, or simply turn in the keys and walk away with no further obligation. The decision is yours.
What About the Finances?
When making a lease vs purchase decision, finances are always going to play a major role. In this area, leasing has several advantages as well. When a company elects to purchase their vehicles, they’re forced to provide a large outlay of capital that can be better spent elsewhere in the business. Should they decide to finance them, they’re going to be stuck providing a down payment, and then making a larger monthly payment than required for a lease. Because leasing allows you to pay only for the portion of the vehicle being used, your monthly payments are often much lower. Additionally, as mentioned previously, leasing eliminates the risk of owing more than the vehicle is worth, allowing your employees to driver newer, nicer looking vehicles more often.
If you’d like to learn more about how high-mileage leasing can help your company achieve its goals, please feel free to send us a message at info@motorlease.com, or give us a call at (800) 243-0182.
Motorlease Fleet Management & Leasing Solutions