Will Your Lease Cost More Than You Planned?

by Remar Sutton

If you leased a car, I'll bet you've forgotten the mileage terms for that lease. You know how many miles you can drive before your "excess mileage" clause kicks in. Excess mileage is the nightmare of lessees (that's you). Why? Because most leases are based on distances a snail can crawl, not on distances a busy person really drives. Lots of leases are based on driving 12,000 miles per year, even though the average person drives about 18,000 per year. And many leases penalize you 15 cents per mile for those extra miles, too.

It adds up. In our example, on a four-year lease, you would have to fork over $3,600 in cash as an excess mileage penalty. Could you do that?

Determining your potential penalty: That's why, even if your lease is only six months old, you should sit down, pull out your lease contract, and open your eyes. Here's a way to know your damages before they happen--and maybe prevent them.

1. Figure out how many miles you really drive per month. Look at the miles on your car, and divide it by the months you've had the lease. Put your average monthly mileage right here: ____________.
2. Multiply your monthly average by the number of months in your lease. Put the total miles you'll really drive right here: _______________.
3. Write down the total miles your lease allows right here: ______________.
4. Determine your probable "excess miles": Subtract the figure on line 1 from that on line 2, and put the result here: _______________.
5. Determine your probable "excess mileage" penalty. Multiply the figure on line 4 by the mileage charge in your lease. Put the dollar amount of your penalty right here--and take a deep breath as you do it: ________________.

• Damage control: You can reduce or do away with that penalty, if you do one (or both) of the following:
• Determine a mileage budget for the remainder of your lease: Write down the figure on line 4 here: ___________.
  Divide that by the months remaining in your contract and put the amount here: _____________.
  Circle it. That's how many miles you must save each month.
• Car pool; combine trips; take up hiking--whatever, you must cut down your driving to cut out your penalty.

Buy the car at lease-end. You don't pay a penalty if you buy the vehicle, and the price you'll pay already is listed in your lease. And if you decide to buy it, talk to Progressions about financing it!

Editor's note: Remar Sutton's car-buying tips have been featured on "Good Morning America," "Today," "20/20," "Nightline," and in magazines such as People, Newsweek, and Credit Union Magazine. He's president of the national Consumer Task Force for Automotive Issues. He writes this column exclusively for credit union members.

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