Don't Pay Your Lease Mileage Overage
You have options we haven't had before
If you leased a vehicle to host on Turo 2 or 3 years ago, your lease is about to mature and you likely have a massive mileage overage to pay when you turn it in.
Don't. You have options available to you right now that we've not had before, not like this. Let me explain.
I built my fleet of 20 vehicles with 13 leases. I planned ahead, banked money every month into an interest bearing account, and the cash is ready for the overage fees. But I sure didn't want to have to turn loose of it. Then 2021 happened. Several of my leases were set to mature in 2021. But I did not pay a dollar of mileage overage on the ones I exited. I extended some of them which are now maturing in 2022. Over the next three months I will exit all of my remaining leases, keeping the mileage overage money in the bank, AND getting a check cut to me instead of me writing a check to the lessor. Here are some case studies from my own fleet.
2018 Honda Civic 1:
Lease matured last summer. Residual was $11,ish. Mileage overage fee owed was $5,250. Private party value was $18,ish. I took it to the Honda dealership with the empty lot. They paid the residual, cut me a check for over $3,000, and the $5,250 mileage money stayed in the bank.
2018 Toyota CH-R:
Lease matured last summer. Residual was $13,ish. Private party value was over $18,ish. Mileage overage fee owed was over $3,000. I financed the residual at a 4% interest rate and kept the vehicle running on Turo. It's one of my best performers. Kept the mileage overage money in the bank. Private party value has since increased further and is now $20,120.
2018 Honda Civic 2:
Lease matured last summer. Residual was $11,ish. Mileage overage fee owed was $5,700. Private party value was $18,ish. I paid cash for the residual, kept my mileage overage money, and kept it running on Turo. Dealership is offering me $14,000 but I may hold out and sell private party.
2018 Jeep Compass
Lease matures in about a week. Residual is $15,500. Mileage overage fee owed is $7,175. Private party value is $22,176. Dealer wants me to bring it by today and I'm expecting an offer around $19,000. I'll keep the mileage overage fee in the bank and leave with a check for around $3,500.
By the end of the month I'll be doing the same with my Subaru Crosstrek and Volkswagen Jetta, both of which will have the same outcome.
You have three options available to you.
Buy out the lease, then sell it private party. This will take longer but you'll make more money. You will pay sales tax but still be in a strong value positive position and keep the mileage overage money.
Take your vehicle to a dealership and let them cut you a check. You'll make less money this way, but it's a quick and easy exit with a check in your hand within an hour.
Pay or finance the residual+sales tax and keep running the vehicle on Turo. You'll keep your mileage overage money, keep making money on Turo, and likely still be in a value positive position through 2022 and 2023.
There's no brilliance here. Those of us who have leased vehicles are just really, really lucky with a perfect storm of factors working in our favor.