The Truth About High-Mileage Leasing
If you’ve ever seen advertisements on tv or in the newspaper for a retail vehicle lease, you’ve likely noticed that they don’t speak to high-mileage leasing. They’re typically offered for 12,000 miles per year or less. It is because of this that many people are under the assumption that vehicle leases can’t be written for higher mileage drivers. This simply isn’t the case.
In fact, vehicle leases can be written for whatever amount of miles fit your needs. For example, if you have drivers who travel 50,000 miles per year, a high-mileage lease can be written to accommodate them. Fleet management companies operate on a commercial basis and specialize in creating lease programs for vehicles that travel well above the standard 10,000 – 12,000 annual miles advertised by dealerships because that’s what their clientele typically needs.
In this article, we’ll set the record straight regarding some of the myths surrounding high-mileage leasing.
Myth: Purchasing is a better option than leasing if you’re a high-mileage driver
It may seem counterintuitive, but the more miles you put on your vehicle per year, the better off you would be with a high-mileage lease as opposed to purchasing the vehicle outright.
The greatest reason why it makes more sense to operate a high-mileage lease comes down to depreciation. It’s a well-known fact that a vehicle depreciates the fastest in the first few years of ownership. It’s also true that with the exception of severe physical damage, nothing depreciates a vehicle faster than mileage. As a result, someone who purchases a vehicle and puts a high number of miles on it within the first few years will be in the unenviable position of possessing a massive amount of negative equity. Put simply, they’ll owe much more than the vehicle is actually worth.
This is a problem because it forces the owner to keep the vehicle for longer than they may ideally want to. Their only other option is to take a large financial hit on resale or trade. 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 typically turned over every few years, thus creating a conundrum.
A high-mileage lease solves that problem. By design, a closed-end high-milage lease allows you to pay for only the portion of the vehicle that you use. Once your lease term is up, you can simply hand over the keys and walk away. The actual value of the vehicle is of no concern to you because the lessor is responsible for the loss or gain upon resale. Compared to a dealership, professional fleet management companies are used to working with commercial clients who drive high mileages, so they’re not afraid of taking that risk.
Myth: I shouldn’t consider a high-mileage lease because if my needs change, I’m stuck
When people think of leasing, inflexibility is a term that often comes to mind. They have heard horror stories from friends and family and are worried that if their needs change in the middle of the lease, they have no recourse and are stuck in a product that no longer suits them. However, it’s important to understand that it isn’t the lease itself that is inflexible, but rather the lessor.
For that reason, it’s important to work with a company that provides you options. Commercial fleet management companies such as Motorlease will work with clients if their needs change. Options such as pooled mileage and rewriting a lease mid-term can help alleviate any concerns surrounding flexibility.
Myth: There are too many fees associated with a high-mileage lease
If you have experience leasing through a dealer, or even through certain fleet management companies, you may have been left with a sour taste due to the exorbitant amount of fees that you were charged. Acquisition fees, disposition fees, excess mileage fees, wear and tear fees, and the list goes on. The experience might have left you feeling like leasing just isn’t for you. It’s important not to let a past experience get in the way of exploring the benefits of high-mileage leasing. Not all lessors are the same, and who you choose to partner with will go a long way in determining the type of experience you have. Working with a company such as Motorlease, which specializes in minimizing ancillary charges and providing your company with a fixed-cost solution will ultimately result in a much more pleasant and financially friendly experience.
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 firstname.lastname@example.org, or give us a call at (800) 243-0182.