![man with clipboard checklist in front of open bonnet](/assets/car leasing explained/excess-mileage-charges-explained.jpg)
There are some common misconceptions around leasing cars, but the confusion over excess mileage charges is one of the big ones and often stops people from considering leasing. Here's why it shouldn't…
When it comes to leasing and excess mileage charges, what people don't realise is that it will only affect you if you don't carefully plan, when initially agreeing the terms of your contract.
There are some things you should consider when you're deciding what mileage to go for. Do you drive long distances to work, or is your commute fairly short? It's important to think properly about your driving habits before agreeing anything.
How Do You Pick A Perfect Mileage?
Standard leasing deals include mileages ranging from 10,000 to 30,000 per annum. Ultimately, the flexibility offered is enormous and with this available, do you really think you would exceed this with the right preparation and guidance?
Car finance is always based on the residual value of a car after an agreement ends. If you exceed your mileage limit, this will affect the residual value and you will have to pay for it. But it's really not as bad as you probably think…more on this below.
When Are Excess Mileage Charges Paid?
Another thing to bear in mind is that your mileage allowance is pooled together. This means that if you have a 3-year contract with 10,000 miles per year, you actually have one big pot of 30,000 over all 3 years.
You can spread your miles out throughout the years however you please – the power is in your hands. If you do 8,000 miles in your first year, 12,000 in the second and 10,000 in the final year – this is absolutely fine.
Whilst it is termed 'annual mileage', you won't actually pay for any extra miles in your lease car every 12 months. Your finance provider will consider your total mileage at the end of your contract rather than on an annual basis.
How Are Excess Mileage Charges Calculated?
Charges for exceeding your agreed upon mileage are calculated on a pence-per-mile basis based on the following factors:
- Your pre-agreed mileage
- The manufacturer and model of the car
- Who your finance provider is
- The total number of miles on the vehicle when it is returned
Often the cost per mile is around 10p, this can as little as 5p or as much as 30p depending on the factors above.
At Vanarama we'll always try to find the perfect lease deal to suit your needs. If you need more help with estimating mileage, our friendly and knowledgeable team are on hand to assist you.
What Are The Potential Penalties For Exceeding Mileage Limits?
As stated by the contract terms, if you do go over your agreed mileage you should expect an excess fee – but even this isn't a big amount. How much you pay per mile will depend on the manufacturer, but it's often very reasonable.
And remember, if you're part-way through your lease and decide you need more miles on the clock, it might be possible to make a change, so don't hesitate to give us a call and we'll try to arrange this.
Can I Increase My Annual Mileage During My Lease?
If you think that your mileage is going to change, we can usually get a quote for increasing your agreement if your car is on contract hire. Changes to mileage are at the discretion of the funder, so, it's best to let us know as soon as possible so that our team can help find a solution for you.