If an employer pays full mileage rate, does leasing make sense?

Does the business require her to have a car less than 5 years old?

I am not an expert in leases but dont they usually hammer you hard when you go over the mileage limit?

Id say the best thing to do is buy a cheap, small car that gets great gas mileage, like a mazda 3.

More important financial aspects of leasing are if you "must" have a new car, plan to only keep it for a short term, and can stay under mileage.

At 20k miles per year, you likely won't be able to lease.

Keep in mind leasing is just simply a "balloon" method of financing. Getting supplemental income for a vehicle really doesn't do much to affect how you should finance.

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9/10 times I get a rental car.

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That's what I do.

I was looking more at two specific areas and which makes sense for buying or leasing (or throw in rentals since you brought it up)

(a) tax implications.

(b) investment implications

A car is not an investment, but the money used to purchase it is in investments and averaging around 28% growth right now. With the potential write offs in the tax code for investing in business use items and depreciation, does this offset the cost in lost investment income?

Also, in leasing, the payments at $.55 a mile don't fully cover all costs. There is almost always some deposit, taxes, down payment, etc..., plus, as mentioned above, excess mileage. But, does paying that equal more or less in lost investment income in comparison to purchasing and putting down a sizeable down payment?

Finally, in comparing rentals, that is a win if you have a great rate, insurance coverage is good, etc... but it is always a crap shoot on the car and there is the whole pick up/ drop off hassle. Also, mileage reimbursement on rentals creates its own issues for tax implications but has no bearing on real financial decisions.

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Why wouldn't you buy a car with zero down? Your wife's employer is paying over $10k in mileage a year, shouldn't that more than cover the note?

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Well, that won't, actually.

So, let's look at the kind of vehicle she requires. Her clients are all C-Level making bank. Her clients are all $1 billion+ annual businesses. She has to be in an impressive car. That means something at least $50k or greater. E-Class Mercedes or something similar.

Business mileage at 20k a year = $11,100

4 year note:$1250 a month = $15,000 a year
Insurance per year = $1900 a year
maintenance average a year = $500
Fuel = $3400 a year

So then $11.1k - ($15k + $1.9k + $500 + $3.4k) = -($9,700) a year in the hole. Haven't even touched tax, title and registration, yet.

Leasing allows you to write off a portion of the monthly note, no?

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So, let's look at the kind of vehicle she requires. Her clients are all C-Level making bank. Her clients are all $1 billion+ annual businesses. She has to be in an impressive car. That means something at least $50k or greater. E-Class Mercedes or something similar.

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If she really truly needs a car like that to impress clients, then her employer should be willing to kick in some extra. Or just flat-out provide the car for her.

My question is, does she drive the clients to lunch or other places and legitimately needs a nice car, or does she just want the luxury car to be visible in the parking lot, to project an aura of success?

For salesmen, I'm more wary when they drive a luxury vehicle. It projects that they're probably making loads of commission off of my purchase of their products.

And...
She NEEDS a car for personal use too.

E Class MB does nothing for me if someone feels they have to drive it as a statement. Is she a high-end call girl?

Get a new Lexus 350ES for 35k* and tell her coworkers to SHUTUP.

$35k New ES 350 Listing

So, the question is not anything that's yet been addressed. Not bashing, but the point is... in consideration of all factors, which, economically and tax wise, makes the most sense under these conditions? She's not worried about paying for the car. She's well compensated. She does the things listed above, the nails, the hair, the clothes, yaddy-yadda. Car goes with it.

So, in example A, if leasing the car, the cost for the cars she's considering seem to be somewhere around $57k-$62k. Leases are around $599, plus the $.25 a mile above the 10,000 mile threshold, so around $800 a month in total. Over 36 months that's $28,800. Over the same time frame she gets back around $33,300,which might cover the up-front costs she has (taxes, title, registration, etc..). Add in another $600 for disposition fee. In this example, total costs vs. reimbursement are almost a wash. No maintenance, insurance or fuel costs are included in this example.

In example B, on a purchase, same time frame, with $20k down, the payments at 36 months would be around $820 a month (48 months). So, not counting tax, title, registration, etc.., she's out $49,520.00 at three years (same term as lease)with another $9840 to go to pay off the car. After getting $33,000 from the company on mileage, she's out $16,520 over the same time, plus she's out (conservatively) $15,000 in expected investment earnings from the $20k she plans to put down. That's -($31,500) (conservative estimate) in the hole with another year to go on the loan, plus another year of lost investment earnings.

In Example A, after 3 years, not including the tax benefits from writing off the lease and expenses, a total of basically zero has been spent out-of-pocket. She is left with zero in value on the car, and has reasonable expectations of earning an extra $15k-$20k in investment income in the same time period from the $20k she doesn't put down. Conclusion: $15k to the good.

In example B, after 3 years of buying, not including tax benefits from investment tax benefits and depreciation, what she has left is a negative value of -($31,500) and a balance owed of -($9840) for a total negative balance (at 36 months) of -($41,300). This is offset by the value of the vehicle, which at that time should have a value of 55% of original purchase price, so around $31,500.00. I'm considering the high mileage hit (it'll be around 80,000 miles).

If I take my negative balance of -($41,300) and subtract the vehicle's value of $31,500 I'm left with a value of -($9,800).

This creates a delta between the two scenarios of almost $25k.

These are numbers that are easy to determine. What I want to know is, from a tax, investment or depreciation schedule, how does Example B somehow end up beating Example A? Every poster (including me) espouses buying (I have a 14 year old Lexus. They are great when paid off). In the long run, however, that $20k down payment is gone forever from investment growth, so it represents a huge hit over time. I've never believed in a lease before, but these numbers are making me think there may be a reason it might make sense.... if you are managing your investments.

Tell me what I'm not considering in these equations or why this is not a fair comparison? Where is this wrong?