I am that person that does not go over the yearly mileage.
Tell me why this is a bad idea other than having to put down a hefty origination fee like $5000.
Depends what you do with it at the end of your lease. If you intend to give it back, you're locking in a fairly costly way to drive a new truck. If you're going to buy it at the end of the lease, that may be a practical way to reduce your out of pocket over the first three or four years. But then again, maybe not, depending on the lease deal. What you are definitely doing is locking in what you will be paying for the lease term. If you buy and finance, if you put enough down to where you don't owe more than the truck is worth, you can always get out of it.
All the self appointed financial gurus advise against buying a new car. If you're only going to keep it for a few years, that's sound advice. It's also sound advice if you're going to buy an expensive car. and you want to save money, sort of. If you really wanted to save money, you wouldn't be buying an expensive car at all. In my household, my wife and I are permitted to get a new car every eight years. My wife hasn't quite kept that rule, we traded the first car we bought her after 6.5 years, since she wanted a van to carpool with the neighbors. I haven't either, but in the other direction, I kept my last two for 10.5 years and 12 years. I will have to say that the 12 years was too long, the car started needing stuff and I wasn't saving nearly enough to justify the inconvenience of having a repair or two per year. My wife's car is a 2014 Explorer , she'll be getting something new this fall. I have a 2014 Fusion, my eight years is up next year, and I think I'm going to take my eight year option, mainly because I want
something different. I feel sort of guilty about it, the Fusion is by far the most reliable vehicle I've ever had, but now that the daily commute has turned into a weekly one, I want something different to drive.
So here's a case study. Two years ago, we bought my younger daughter a 2017 Escape Titanium with 21,000 miles on it for right about $20,000. That car stickered for $28,000 more or less. Let's say the actual transaction price was $27,000 including that annoying dealer fee, but not tax. We pay a 6% tax on vehicle purchases here, so that was $21,200 for the used Escape, and would be $28,620 for the new one. Since I had good results keeping a car for 10 years but not so much 12 years, I'm going to say my daughter should replace this car at 10 years of age. I went to Edmunds and did a valuation on a 10 year old Escape equipped like the one she has, and it came back with a value of right around $5,000 for a private party sale, which is what I would do with a car of that value. One much more than that I would likely trade.
So, for the new Escape, keeping it until it is 10 years old would be around $23,600 depreciation, and for the used one, $16,200. That's $2,360 per year for the new one and $2,025 for the eight years she'd be keeping the one we bought. We didn't finance her car, so there's not a cost of money to look at here. Even if we had financed it, new car rates are lower than used car rates, and the cost of money would be insignificant. Now, I wasn't about to buy either child a new car, buying a teenager a new car is bad juju, and they take these cars off to college and it's very likely the vehicles will suffer some minor damage while at school. Maintenance and repairs should be nearly identical for both vehicles, keeping the new one 10 years would be a couple more oil changes than keeping the used one for eight years, any repairs would be under warranty, and the one we bought had the original tires.
I suppose leasing can be a decent option if you absolutely must trade your car in every couple of years and don't drive them. I'm not that. I run my vehicles in to the ground.
I got close to that with the car I kept for 12 years. My experience was that the money saved wasn't enough to justify keeping the car that long.
