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    What is excess mileage charge?

    Is your car or van under a lease agreement or on finance? If so, you need to know about excess mileage charges and what to do if you exceed them.

    Many lease and PCP financing agreements outline the maximum predetermined mileage that the vehicle can be driven each year. If you go over this amount, you will be charged an excess mileage charge, which is usually paid at the end of your contract.

    The excess mileage charge is designed to compensate for the additional wear-and-tear and value depreciation caused by adding mileage to your vehicle. 

    Understanding this fee is crucial for leaseholders to avoid unexpected costs and make informed decisions regarding their driving habits and lease terms.

    Excess mileage charges 101

    The excess mileage charge applies to leased or financed vehicles which have gone over their predetermined annual mileage.

    When you sign a lease or financing agreement, your finance company will most likely set a limit on the total number of miles you can drive that vehicle per year. They use this limit to help predict the value of the car at the end of your contract. With fewer miles on it, the car will be worth more when it’s sold on.

    However, if you go over this agreed annual mileage allowance, you will face excess mileage charges. Compensating for wear-and-tear, these charges vary depending on your contract, type of vehicle, and location. In general, excess mileage charges are calculated based on the cost per mile or kilometre driven beyond the agreed-upon limit.

    Exceeding the mileage limit can result in substantial charges at the end of your lease. Understanding your mileage allowance, monitoring your driving patterns, and negotiating lease terms if necessary are all crucial for your pocketbook. 

    Scenarios triggering excess mileage charges

    Common situations that can lead to surpassing your annual mileage include: 

    • Long commutes – Lengthy daily commutes can lead to surpassing your  mileage allowance quicker than expected
    • Frequent travel – Regular long-distance travel for work or leisure can contribute to exceeding the agreed-upon mileage limit
    • Lifestyle changes – Big vhanges such as a new job, relocation, or family commitments may result in increased driving, leading to excess mileage
    • Underestimating maximum mileage terms – Leaseholders who underestimate their annual mileage during lease negotiation may unknowingly exceed their limit

    Excess mileage charges payment

    Excess mileage charges are settled at the end of your lease term, usually when returning your vehicle if on loan. 

    Your leasing company will calculate the total excess miles driven by subtracting the agreed-upon mileage limit from the actual mileage recorded at the end of the contract period.

    The excess mileage charge is then calculated by multiplying the number of excess miles by your loan company’s predetermined rate per mile or kilometre, as specified in the lease agreement.

    The total amount owed will be included in your final invoice. Leasing companies typically offer a variety of ways for customers to settle excess mileage charges. This includes payment via one lump sum, in installments, extending your lease, or rolling these charges into a new lease with the same company.

    How to not exceed your mileage limit

    Unnecessary journeys can add to your mileage count

    One way to avoid surpassing your mileage limit is to plan efficient driving routes, suhc as by combining errands and opting for the shortest paths between A and B.  

    You can also consider carpooling to share rides and split mileage or utilising public transportation to minimise vehicle usage.

    If you anticipate exceeding your designated mileage, there are several options you can consider:

    • Negotiate with your leasing company to adjust your mileage limit before signing the lease, allowing for a higher threshold that better suits your needs. 
    • Purchase additional miles upfront from your leasing company, if your agreement allows. Many companies offer the option to purchase more miles at a discounted rate, which effectively increases your mileage allowance. 
    • Explore lease extensions, which can spread out your mileage over a longer period of time. This can potentially reduce excess charges and provide more flexibility in managing your vehicle usage.

    FAQs

    Can I change my mileage allowance?

    Yes, you can alter the annual mileage allowance for your leased or financed vehicle by speaking with your finance provider. 

    How can I avoid excess mileage charge?

    Avoid excess mileage charges by planning efficient routes, carpooling, using public transit, or exploring alternative transportation. Negotiate a higher mileage limit before signing the lease, purchase additional miles, or consider lease extensions if you anticipate surpassing your designated mileage.

    What happens if I exceed my mileage?

    Exceeding your mileage results in additional charges at the end of your financing contract. These charges are calculated based on the excess miles driven multiplied by the predetermined rate per mile/kilometre specified in your lease agreement.

    Is excess mileage charge enforceable?

    Excess mileage charges are enforceable as long as they are clearly outlined in the lease agreement and are fair and reasonable. Consumers have the right to dispute excessive charges and seek resolution through legal channels if necessary.

    How can I track the value of my car?

    If you’re not sure what your car’s value is to begin with, it’s hard to know how mileage might impact the price.

    All vehicles depreciate at varying rates, with no rule of averages accurately describing any one car’s changing value. Motorway’s Car Value Tracker provides a free, reliable monthly price alert for up to six vehicles at once. 

    Follow changes to your car’s value to choose the best time to sell, and make informed choices about investments in your car’s maintenance.

    Should you sell your car?

    Want to learn more about the best ways to sell your car? Check out more of our guides here, covering everything you need to know about different finance schemes, and what they mean for you as a car owner. 

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