What are excess-mileage charges on a lease car deal?
Car leasing contracts are agreed based on a fixed maximum mileage, but what happens if you exceed it? We tell you everything you need to know...
When you take out a car or van leasing agreement, you'll be asked to state your expected annual mileage. This forms part of the monthly cost, reflecting the impact high mileages have on a car's value. Quite simply, the more miles you cover, the more your monthly costs are likely to be.
As a safety net, lease car companies will set out an excess-mileage charge. This means you'll have to pay for every extra mile you travel over the mileage limit. This excess-mileage charge can work out to be quite costly, so it's a good idea to take your time at the outset and work out as accurately as possible the mileage you will drive, and ask for a quote based on this.
Many leasing companies will advertise low-mileage contracts to attract customers with their lower monthly rental figures, but these can end up costing you a lot more if you bust the mileage limit.
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Mileage on a leasing contract is usually advertised as 'per year'; for example, 8000 miles or 8k per annum. So, if you were to take out a three-year lease at this level, you would have a total contract mileage of 24,000 or 24k.
What happens if I go over mileage on a lease car?
The company you lease the vehicle from should always advise you of the excess-mileage charge up front, and it should also be shown on your contract. The excess-mileage charge varies depending on the vehicle, so make sure you know what it is.
One thing to remember is that although any contract is quoted with a yearly mileage, any unused miles carry on to the remainder of the contract. In effect, this means that if your contract specifies 8000 miles per year over three years, but you do only 6,000 miles in the first year, then you have an extra 2000 miles to use over the subsequent two years of the contract. It's worth noting that mileage charges could come into play sooner if you decide to end your lease early.
See below for an example of a quote which shows contract mileage and excess-mileage charges:
- Car: Volkswagen Golf 1.0 TSI Life
- Monthly rental cost: £287.65
- Rental in advance: £862.62
- Miles per year: 10,000
- Excess-mileage charge (per mile): 4p
This example shows you that the annual mileage is 10,000 and also shows you the total contract mileage is 30,000. The excess mileage charge is 4p per mile.
If you were to drive 16,000 miles in year one, 8000 miles in year 2 and 14,000 in year 3 this would be a total mileage of 38,000, this is 8000 miles above the contract and the excess mileage charge would be 8000 x 4p = £320.
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