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Excess Mileage Charges Explained

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Excess Mileage Charges Explained

There are some common misconceptions around leasing cars, but the confusion over excess mileage charges is one of the big ones & often stops people from considering leasing. Here's why it shouldn't…

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.

When it comes to leasing & excess mileage charges, whilst it's important to carefully plan and calculate how many miles you'll need, there are options to change your mileage mid-contract so it's not the end of the world if things don't go exactly to plan.


How Do You Pick A Perfect Mileage?

Standard leasing deals include mileages ranging from 8,000 to 30,000 per annum so the flexibility offered is enormous.

Car finance is always based on the car's residual value (how much the car is worth) after the agreement ends. If you exceed your mileage limit, this will affect the residual value & you will have to pay for it. But it's really not as bad as you probably think…more on this below.


Can I Increase Or Decrease My Annual Mileage During My Lease?

If you think your mileage is going to change, we can usually get a quote for changing 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.


When Are Excess Mileage Charges Paid?

Your mileage allowance is pooled together which means 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. So you can spread your miles out throughout the years or however you like – the power is in your hands. If you do 8,000 miles in your first year, 12,000 in the second & 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 until the end of your lease.


How Are Excess Mileage Charges Calculated?

If you do wait until the end of your contract and you've gone over your mileage, charges for exceeding your agreed mileage are calculated on a pence-per-mile basis based on the following factors:

  • Your pre-agreed mileage.

  • The manufacturer & 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 be as little as 5p or as much as 30p depending on the factors above.


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. 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 & 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 & we'll try to arrange this.

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 & knowledgeable team are on hand to assist you.

Find out more about how leasing a car works by taking a look at our handy guides or check out our latest car leasing offers.