Most car leases available in the market have a mileage limit capped at 12,000 miles per year. The low mileage allowance translates to lower monthly payments, which most car lessees find quite affordable.
However, as a business owner, you may find this quite limiting whenever travel needs exceed the allowable mileage. Excess mileage charges are usually hefty and can bloat up your motor vehicle expenses over time.
Car leasing remains the most affordable method of acquiring convenient transport means for business. But if you have had to pay the high additional charges for excess mileage time and again, you have probably found yourself re-evaluating your options. Maybe you have been wondering whether you can lease a car with unlimited mileage. And if yes, what are the financial implications of such a decision?
Are There Unlimited Mileage Car Leases?
Unlimited mileage car leases do exist, though rare. Usually, they are costly hence not popular as most car lessees are comfortable with the 36,000-mile limit that accompanies the standard 36-month car lease contract.
Whenever you lease a car, you are required to pay the difference between the initial cost of the vehicle and the residual amount at the end of the lease contract. This difference is amortized throughout the contract, and you pay a monthly charge to cater for the depreciation. Mileage is the parameter used to calculate how much the car has been put to use, hence how much it has depreciated.
If you acquire a car on an unlimited mileage lease contract, it's anticipated that you will be covering more mileage over the contract's duration. This means the car's residual value at the end of the contract will be much lower than if you signed a limited mileage contract. That being the case, you're expected to make higher monthly payments to match your car use.
In most cases, the cost of an unlimited mileage lease contract is equivalent to buying a new car. This may appear as an imprudent decision, financially, since you end up paying so much, yet you don't get to own the vehicle. But there are upsides to this option.
- Zero loan obligations at the end of the contract - If one person signs up for an unlimited mileage lease contract and another takes a loan and buys a similar car, they may incur the same cost. Even though the lessee ends up with no asset, they are better placed financially than the car buyer, who may still have a considerable loan to clear.
- Freedom to explore more opportunities - Of course, the reason why you would opt for the unlimited mileage lease over the cheaper limited option is the flexibility it offers. You can rack up more miles without worrying about penalties. This allows you to maximize your car usage and explore more opportunities. The good thing with an unlimited mileage lease is that you can enjoy this freedom without ever worrying about the obligations that come with owning a car.
- Ability to upgrade to the latest model - Another reason leasing a car is preferred over buying is the ability to upgrade to the newest model upon contract expiration. Though you can always decide to acquire the car for the residual value, you have the option of upgrading to a newer model upon lease expiration. Buying a car does not give you this flexibility.
Is Unlimited Mileage Car Leasing for You?
Whether you decide to lease a car with unlimited mileage or prefer remaining within the decent costs of limited mileage car leases depends on you. Will the excess mileage you need bring in more business to cover the higher costs of an unlimited mileage lease, or would you instead continue absorbing the extra mileage charges of the limited lease? Which option is best for your long-term business strategy?
Whatever your decision, we will be glad to fulfill it. At Wilmar Inc, we can take care of all your car leasing and fleet management needs. Contact us today and let us customize a perfect fleet solution for you.