When managing a fleet, high-mileage leasing might be something that comes across your radar. But do you know what it is and how it works? In this guide, we’ll look at the high-mileage alternative and how it works, the pros and cons, challenges, and how to determine if this lease is right for your fleet.
Or, perhaps there’s a better option—with Spring Free EV, you can forget about high-mileage leases once and for all with affordable EV fleet options for every business need. More on that later— for now, let’s get to know the lease deal you may have been missing all this time..
What is a High-Mileage Lease?
When most people think of leasing, they think of mileage allowances and dealers who want to keep them as low as possible. Ultra-low mileage might work fine for people who don’t drive a lot, but most fleets aren’t designed for low miles. Enter the high-mileage lease, which is specifically for those who want to lease vehicles but will be driving upwards of 30,000 or even 40,000 miles per year, or more.
This type of lease is ideal for salespeople, service technicians, delivery drivers, and others who spend a lot of time on the road. Some leases can cover up to 100,000 miles or more, but it will cost you the extra miles, which can add up quickly. The difference is the stability and affordability—with a high-mileage lease, you already account for the extra miles and can make your leases a fixed expense.
Most dealerships have at least one option for high-mileage drivers and fleet vehicles, and some may have a few different solutions. All you have to do is ask around. If you’ve already go a fleet dealer that you love, ask them how their high-mileage program works or if they have one.
High-Mileage vs. Traditional Lease Terms
To better understand the value and appeal of high-mileage leasing options, it helps to see things in front of you. Below, you will see an example of the standard terms for a traditional lease and a high-mileage agreement.
Traditional Lease Terms:
- 24-month lease
- 10,000-mile/year allowance
- $0.20 cents per mile over mileage limit
- $400/month lease payment
- 24-month lease
- Unlimited mileage
- $550/month lease payment
If you drive 50,000 miles over the term of your traditional lease, that’s 30,000 more than allotted, or about $6,000 in additional miles each year. Spending the extra $150 on a higher mileage lease costs just $1,800 per year, in comparison, and the annual mileage doesn’t matter. That’s a savings of $3,200 per year, and that’s not factoring in the residual value of depreciation and lease payoff amounts.
Advantages of High Mileage Leases
Certain scenarios may prove to be better for high-mileage leases, but there are plenty of advantages that come with this type of financing. The benefits include:
- Flexibility: These leases offer more flexibility than standard leases, since you already have the mileage allowance you need and you won’t be worried about sticking to the limited terms of your agreement. These leases are not just flexible on mileage; all the terms have a bit more room for adapting to your needs.
- Affordability: This type of financing is more affordable than a standard car loan or auto lease, in most cases. For starters, you’re not paying per-mile overages that can add up a lot faster than you realize and vary significantly from one vehicle to the next. The down payment and upfront costs will usually be cheaper, too, and give you a brand new car.
- More Options: This also gives businesses like yours more options when it comes to finding the best fleet vehicles. Historically, companies may have been limited by the options because of their high-mileage needs, but the growing availability of these leases makes it easy to find what you need.
- Fewer Unexpected Costs: This option has less uncertainty and fewer unexpected fees and costs that will arise. You are paying for more miles, but as mentioned, that’s at a set cost. You won’t have to worry about surprise bills or charges randomly appearing.
- Less Risk of Upside-Down Financing: When you finance to purchase, you have to be careful about mileage so that you don’t run out the value of the vehicle. For example, if you have a loan on a vehicle that’s been driven 100,000 miles in just three years, you are probably going to lose a lot of value for the high miles. So let’s say you’ve got a lease payoff at the three-year mark of $10,000. That same vehicle might only be worth $6,000 in its current high-mile condition, so you owe $4,000 more than it’s worth. High-mileage leasing eliminates this.
When Is a High-Mileage Lease a Good Idea?
Some scenarios where a high-mileage lease might be a good fit include:
- If you have a fleet of delivery vehicles.
- If your fleet is for service techs that have a large service area.
- When you need vehicles for your regional or national sales teams.
- If you have a parts business and need vehicles for parts runners who drive all day.
- If you aren’t ready to buy out your leases or purchase fleet vehicles, but need higher annual mileage limits.
Essentially, if your people are driving a lot of miles but you don’t want to deal with the hassles of purchasing and owning vehicles, high-mileage leases could be the ideal middle ground.
When Is a High-Mileage Lease a Bad Idea?
Most leases impose mileage limits and excess mileage charges, which drives people to look for a better option. The high-mileage lease is the obvious alternative, but it also comes with some challenges:
- These leases aren’t available for all fleets or vehicles.
- Financing for high-mileage vehicles is harder to find.
- Rental fleets and car-sharing services can’t control mileage as easily.
- This lease is more costly, which can impact your profits and growth.
The best thing fleet managers and business owners can do is to look at the features and benefits of this lease and compare it to the other fleet financing options. Then, an educated decision can be made to secure the right financing. Although these leases offer a great opportunity for some, they may not be ideal if you:
- Aren’t going to drive enough to exceed the normal mileage allowances.
- Can’t afford the higher monthly payments.
- Are going to end up underwater with payments and ow more than the vehicles are worth.
If you’ve got a team of sales reps who don’t travel much, but might occasionally need a little extra mileage each year, paying the mileage overage fee is usually more sensible. Most leases have overage rates of $0.10 to $0.25 per mile, which is significantly less than the cost of high-mileage leasing.
Alternatives to High-Mileage Lease
There are options for businesses that have high mileage needs but don’t want to use a this type of lease contract The first alternative is to purchase the vehicle outright so that you don’t have to worry about lease payments or mileage caps. Of course, you then have to be able to pay for the vehicle or make monthly loan payments, which can get just as expensive as leasing.
You can also buy out an existing vehicle you lease for your fleet so that the mileage doesn’t matter, but you’re going to be buying a car that’s already got high miles and may require more maintenance over time—is that something you can handle?
Buy the Vehicle
Most people look to lease a car because it offers them the chance to get new vehicles more frequently. However, there may be times when it still makes sense to buy, even if you’re only going to have the vehicle for a few years. This can also give you a used car or truck for trade-in later on. Plus, you may get better rates, which will allow you to set more aside for future vehicle upgrades.
Commercial and passenger vehicle leases eventually run out,. At the end of the lease, lessees typically have two options:
- Buyout the lease
- Get a new lease/vehicle
If you think this might be something you’ll be interested in down the road, make sure that your lease contracthas that option available. Then, if you drive too many miles, instead of just paying the overages, you can buy the vehicle and continue to use it.
Consider Electric Fleet Vehicles
The best alternative is to skip the high-mileage lease altogether. With Spring Free EV’s fleet solutions, you can get all the fleet vehicles that you need with unlimited mileage and lower upfront payments. Our vehicles are designed for commercial use in high-mileage environments, and we have something for just about every need. With our Mileage Purchase Agreement, you can convert your fleet to electric vehicles and save on so much more than mileage.
When you choose Spring Free EV, you only pay a low upfront cost and monthly payment, with no additional charges for mileage or other lease fees. Plus, you can get an entire fleet of vehicles set up in minutes, and we’ll help you pick the perfect fit for every need. With our EVs and unlimited miles, you’ll increase growth and profitability, reduce costs, and reduce your impact on the environment—what’s not to love?
Evaluating High-Mileage Lease Options
There are some cases where the this lease agreement might still be better than a standard car lease. If that’s the case, that’s fine. However, you’ll want to make sure that you sit down and carefully compare and evaluate the options that you have, including high-mileage vs. standard leases and fleet vehicle purchases with traditional and nontraditional financing solutions.
Selecting the right fleet vehicles is mission critical for any business that has them. In addition to costs, you should also compare:
- Features and included services. What kind of features are included in your lease and/or vehicle(s)? Are you getting additional payment protection, a warranty, or other perks from the lease besides the savings of being able to drive as many miles as you want. Are dealership service and maintenance included? They don’t have to be, but it could be a great selling point.
- The flexibility of the lease or purchase agreement. The high-mileage option is usually more flexible, but you can’t rely on that without checking. After all, even changing the mileage still leaves plenty of room for rigid exceptions and limitations. Be sure to read the fine print and make sure that you understand the parameters before you sign.
- The short- and long-term benefits of each lease option. Going the high-mileage route might be ideal for fleets and companies that put a lot of miles on the roads in the daily operation of their business. However, the payments and up-front costs may be higher, so that’s something to make sure you can afford. Traditional leases might have lower payments, but you’ll probably get gouged on mileage fees for going over the limit.
And while you’re evaluating your options, don’t forget to consider switching to an EV fleet with the help of Spring Free EV.
Spring Free EV’s Model: The Better Alternative to High-Mileage Leases
Electric vehicles aren’t “the future”—they are here and now and they are quickly changing the way that fleets handle transportation acquisitions. Unlike traditional leases that can cost upwards of $5,000 upfront and rack up mileage overages at astronomical rates, Spring Free’s EV lease program is ideal for commercial fleets who need:
- Low upfront payments
- Shorter term leasing options
- Unlimited mileage
- Newer vehicles
It’s never been easier to adopt a new fleet of electric vehicles than it is with Spring Free EV. From pay-per-mile subscriptions to unlimited mileage plans, we’ve got something designed to help all fleet owners reduce their fuel and maintenance costs, control fleet management expenses, and so much more.
The process is simple. All of our leases come with 2,000 miles, or 1,800 for Tesla models. Once you go over that mileage allotment, an average fee is charged up to 2,750 miles. After that, you’ll unlock our flat-rate mileage pricing and we won’t charge you any more than that, whether you manage to drive 5,000 miles by the end of the month or 15,000. You only pay based on the number of miles you need, and eventually that caps, too.
It’s simple, straightforward, and can save you a fortune on fleet vehicle costs. Plus, with electric vehicles, maintenance, breakdowns, and downtime are far less common—you’ll deliver better service and see fewer profits lost to these and other issues.
If you’re looking for a fleet services alternative for your business needs, the high-mileage lease might be a good choice. However, it might also prove to be something that doesn’t quite work—that’s where Spring Free EV comes in. Reach out today to discuss your fleet needs and how we can help.
Whether it’s for the cost savings, the environmental benefits, or a little of both, electric vehicles should be on every fleet manager’s radar. Buying them or financing EVs with a traditional lease could prove to cost a fortune, though, which is what makes Spring Free the perfect alternative.