When you hand back your lease vehicle at the end of your contract, the mileage is one of the first things the inspector's going to check. Which is why it's important to avoid excess mileage charges or, better yet, go with the perfect annual mileage allowance at the start of your lease agreement.
Yet even if you're partway through your lease, there's still a few things you can do like amend your mileage allowance or extend your lease contract.
Thing is . . . you might be surprised to find out the actual cost of excess mileage charges. They could be cheaper than you've been led to believe.
Let's find out, shall we.
Why is There a Mileage Limit on Lease Cars?
Simple economics.
More miles means more wear and tear on the car, which means more depreciation in value, which means more chance of the leasing company losing money once you hand it back.
Remember, you are essentially borrowing a vehicle at the end of the day.
Which is why the annual mileage limit that you choose at the start of the agreement plays such a big part in determining what your monthly payments will be. The finance provider uses it to estimate the resale value of the car at the end of your lease. Go over your mileage, and the resale value's probably going to be a bit less.
So, How Much Mileage Should I Choose For My Lease?
A good rule of thumb is to go with a bit more than what you think you'll do.
You never know how many emergencies and surprise trips can pop up over the course of a year. And bear in mind that you'll probably be driving more in the winter months due to the poorer weather. Can't walk to Tesco if it's raining buckets . . .
So choose a realistic mileage allowance by working out roughly how many miles you drive in a month, multiply that by 12, and then allow for another 2,000 miles or so.
For example, if you expect to cover roughly 5,000 miles per year, consider choosing 7,000 miles just to be on the safe side.
What Happens If I Exceed the Agreed Mileage On the Lease Contract?
If you exceed your annual mileage allowance, you'll have to pay for excess mileage charges at the end of your contract. These will show up in your final invoice.
Obviously, the leasing company will determine if you've exceeded your mileage by subtracting your contractual mileage from your actual mileage.
Needless to say, any 'clocking' or tampering with the mileage counter is strictly illegal, and leasing companies aren't ones to be duped.
And How Are Excess Mileage Charges Calculated?
They're calculated for every mile that you go over, and the rate that we often see is 7p - 11p per mile.
Do note though that excess mileage charges vary quite a bit and could be as low as 5p per mile or as high as 30p per mile. In any case, check your lease contract for the exact figure specified by your car leasing company.
But if we assume a rate of 7 - 11p per mile, that means you'll be charged anywhere from £70 - £110 for every 1,000 miles over your allowance.
A word to the wise . . . it can sometimes actually work out cheaper to pay excess mileage charges than to opt for a higher mileage limit at the start of your lease agreement!
How Do I Find Out the Excess Mileage Charges for My Chosen Lease Vehicle?
Like we say, better dig the papers out.
Your rate of excess mileage charges should be displayed clearly on your initial lease quotation and also on your finance agreement and contract.
Is My Annual Mileage Tracked Each Year or at the End of the Contract?
At the end of the contract.
Let's say you're on a 2-year lease contract with a mileage allowance of 10,000 miles per year.
In that case, it's perfectly fine for you to drive, say, 15,000 miles in year 1 and 5,000 miles in year 2.
So rather than thinking of it as 10,000 miles permitted per year, think of it as one big pot of 20,000 miles that you can use over the 2 years.
This is also part of the reason why you'll pay any excess mileage charges at the end of the contract rather than at the end of year 1 or year 2.
Can I Lease a Car With Unlimited Mileage?
Unfortunately, it's not possible to lease a car with unlimited mileage.
The next best thing would be 35,000 miles per year, which is the maximum permitted mileage on any of the lease vehicles advertised here at LeaseLoco.
However, you could in theory do more than that and just pay for the excess at the end of your contract, but you'd have to be driving an awful lot.
Does the Car Leasing Finance Provider Pay Back Any Leftover Miles?
Unfortunately not.
So if you're on a 2-year lease with a 20,000-miles allowance across those 2 years, but you only cover 10,000 miles in total, you don't get any of those unused miles 'back' as reimbursement.
That's because your monthly payments were calculated based on the 20,000 miles that you thought you'd cover when you took out the lease.
So whilst it's important not to underestimate your mileage needs, it's best not to overestimate it by a whole lot either. You could end up paying more than you need to.
Can I Change My Mileage Allowance?
Yes, it's often possible to amend your mileage allowance if you think you're going to exceed your mileage allowance. Or if you already have.
Known as a mileage extension, this will likely change your monthly payments as a result, and you'll be issued with new documentation outlining the change.
So if you find yourself covering a lot more miles than you bargained for, just give your finance/leasing provider a call and see what's possible. Not every company will let you do this, but like they say . . . nothing ventured, nothing gained.
Consider Extending Your Lease
Or instead of amending your mileage allowance, you could extend your car lease by asking for a lease extension.
This might be the more attractive option if you really enjoy the vehicle and want to hold onto it for a bit longer, or alternatively if you're in the last year or so of your lease and aren't sure what your next vehicle is going to be.
What is the Average UK Mileage?
The average UK annual mileage is actually around 6,500 miles per year – similar to what it was during the pandemic.
On that basis, 'high mileage' could be classed as anything over 15,000 miles per year on a personal lease deal, or anything over 20,000-25,000 miles per year on a business lease deal.
Lease Your Next Car with LeaseLoco
So, that's excess mileage charges explained.
Decided that a lease car might be right for you? Then LeaseLoco is the place to be for great value on car lease deals.
Choose from various mileage options starting with 5,000 miles per year, or anything up to 35,000 miles per year.
FAQs
What is an excess mileage charge?
Excess mileage charges are fees that you pay at the end of your contract for going over your permitted annual mileage allowance.
Basically, excess miles means that the vehicle is likely to depreciate and lose more value than the finance provider anticipated, so excess mileage charges are their way of recovering that value.
How much do I get charged for going over my mileage?
The exact rate of excess mileage charges varies from provider to provider, but generally you're looking at a charge of anywhere from 3p to 30p per mile when you exceed your mileage allowance. Look up the exact rate (if provided) in your car lease contract.
Can I change my mileage allowance?
Yes, it's often possible to change your mileage allowance during the course of your car lease agreement. Different companies have different policies regarding this, so it's best to contact your leasing or finance provider in the first instance.
Is an excess mileage charge enforceable?
Yes, excess mileage charges can generally be enforced. This is because when you signed your car lease agreement, you would have agreed to any commitments, and therefore also any charges resulting from a breach of those commitments.