The End of an Auto Lease 
by Gary Foreman

Dear Dollar Stretcher,  
I am currently in my last year of a four year lease on a '98 Ford Windstar. We are probably going to end up purchasing the van at the end of the lease because we are way over on our allotted miles. We have a pre-determined purchase price of almost $14,000. I have heard that these are negotiable at the end of the lease. Is this true? Why would they negotiate with me when they know that I am "stuck" with the pre-determined price? How does one go about negotiating the purchase price at the end of the lease? I obviously would not tell them I am over on my miles unless it became an issue. Any suggestions? I like the van but would like to get it for less. The estimated trade in value is $9,560. Thanks for your help.  Kelli

Kelli is at the most interesting time in an auto lease - the end. And her case is complicated because of the excess mileage.

Most leases charge between 10 and 25 cents per mile over a standard allotment. Dealers like to manipulate how many miles are allowed. They can easily lower the monthly lease fee by allowing fewer miles in the contract. And, most people only think about the lower payment. Not the restriction on mileage. At least until they get to the end of the lease. Kelli can find out how much she'll pay for the mileage by checking her lease agreement. It will specify the mileage allowed and the cost per mile over the allowance.

She'll pay for the excess miles in one of two ways. She'll either write a check when she turns in the van or she'll pay more for the van than it's actually worth.

Not telling them about the extra miles isn't an option. Not only are they going to check the odometer, they'll also check for dents, scratches and any wear that can be deemed 'excessive'. And Kelli will pay for that, too. So the first thing for Kelli to recognize is that she will pay for the mileage. Those miles might cost her less if she buys the van, but she'll still pay.

Next Kelli needs to get an idea of how much less her van is worth because of the mileage. We don't know how many miles the van has. She just said that they were "way over" the limit. The average car gets driven about 12,000 miles per year. We went to the KellyBlueBook.com site to get some pricing for a 1998 Windstar. Retail on a typically equipped van with 48,000 miles is listed at $13,530.

How much difference can the extra mileage make? Again, according to KelleyBlueBook.com, a 1998 Windstar with 70,000 miles is worth $1,475 less than one with only 48,000 miles. That's more than a 10% price difference.

OK, so what are Kelli's options? She has two. First, she can write a check for the excess mileage and then buy a different car or mini-van. Her total cost will be the mileage penalty at the first dealer plus the cost of the replacement.

The other option is to negotiate with her dealer to buy the Windstar. Again, her cost will be the mileage penalty plus whatever price she can get on the Windstar. It's possible that the dealer could waive the mileage charge if she buys the van. But that will mean that the dealer will need to get more for the van.

Negotiating is easy. Just tell the dealer that you want a lower price. They may lower the price or ask you to make an offer.

Why would they negotiate when a price is set? First, because the lease buyout price is only a commitment from the dealer to offer it at that price. The dealer is "stuck" with that price. She isn't. She's free to buy it at that price, negotiate a better price if she can or not buy the van at all.

Second, because they know that the Windstar isn't worth $14,000. Remember, this is a high mileage car. The dealer's goal is to make the most they can on the van. They'll start with the mileage charge. Then they'll add the best price they can get from Kelli or another buyer.

An important price for Kelli to know is what she would pay for another vehicle with similar equipment and mileage. She should shop around to get a good idea of what that price is before she goes in to talk with the dealer.

Kelli can forget about trade-in prices. They aren't relevant here. "Trade-in" is what you'd get if you were selling to the dealer. Kelli doesn't own the van, so she can't sell it.

Is it a good idea to buy the Windstar? One advantage to buying it is that she knows what's wrong. Presumably it was well cared for and that often makes a difference when a car gets past three or four years old.

Of course the disadvantage to buying the Windstar is that it's a high mileage vehicle. And that could mean that things are about to wear out. Whatever Kelli decides, we hope that she gets a safe, dependable, reasonably priced vehicle for her family.

Gary Foreman is a former purchasing manager who currently edits The Dollar Stretcher website www.stretcher.com. You'll find hundreds of free articles to save you time and money.

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