Mileage and Excess Mileage Explained

Mileage and Excess Mileage Explained

Welcome to our comprehensive guide on mileage and excess mileage in terms of leasing a vehicle. Whether it’s your first time or you’re a seasoned pro, understanding the intricacies of mileage is crucial to making informed decisions and ensuring a smooth leasing experience. Mileage plays a pivotal role in lease agreements, impacting your monthly payments and potentially leading to additional costs if exceeded. In this guide, we'll delve into the fundamentals of mileage in car leasing, explore how it affects your lease terms, and provide valuable insights on managing excess mileage.

Mileage Allowance

When it comes to vehicles, the mileage stands out as one of the most important metrics. With a lease on a brand-new vehicle, there’s no concern about current mileage on the clock as this will be minimal. Instead, the primary focus shifts to your car’s mileage limit - the maximum number of miles you anticipate covering during the lease period.

Suppose you opt for a three-year lease contract, averaging 10,000 miles annually. In this case, when you return the vehicle at the end of the lease term, it would have accumulated around 30,000 miles. The finance company, if they decide to sell the vehicle, can price it accordingly. However, if your annual mileage exceeds this, say 20,000 miles a year, the finance company must factor in the additional depreciation when determining the overall value of the vehicle.

When entering into a car lease, it's imperative to establish a predefined limit on the annual mileage. This limit is mutually agreed upon between you and the finance company at the outset of the lease agreement. It's crucial to carefully consider and confirm your comfort with the agreed-upon mileage limit to steer clear of any potential excess mileage charges that might be incurred when returning the vehicle at the end of the lease period.

Excess Mileage Charges

If you surpass your agreed car mileage during a lease, the most significant consequence would be incurring a penalty fee. Importantly, this occurrence does not negatively impact your ability to secure a lease vehicle in the future. Many individuals tend to underestimate their vehicle usage, and finance companies are well-prepared to address such situations.

Every lease agreement will specify a unique cost per mile for any excess mileage, and this detail will be documented in your contract. In the event that you exceed your agreed-upon mileage limit, an extra charge will be applicable. The specific amount can vary depending on the car model and the terms outlined in your lease agreement. These fees could vary from a few pence per mile to as much as a pound per mile, or possibly more.

Tips To Avoid Incurring An Excess Mileage Charge

Here are some valuable suggestions to help you steer clear of excess mileage charges:

  1. Ensure that your estimated annual mileage aligns with your actual driving habits. Being realistic about the distances you cover in a year forms the foundation for avoiding unexpected charges.

  2. Integrate a buffer into your estimated mileage to act as a safety net. Accounting for unforeseen circumstances or spontaneous trips ensures that you remain within your agreed-upon mileage limit without incurring additional fees.

  3. If your circumstances change and you anticipate exceeding your initial mileage projection, keep the lines of communication open with the funder. Promptly notify them of any significant alterations in your driving habits or lifestyle. Some leasing agreements may offer the flexibility to adjust the contract mileage mid-way, helping you avoid penalties by proactively addressing potential overages.

Mileage FAQs

Uncover answers to some common questions regarding mileage and excess mileage charges. If you have any further questions, please contact us to speak directly with one of our leasing experts. We aim to make the leasing process as straightforward as possible to understand.

Can I increase my mileage allowance?

If you're approaching or have already exceeded your mileage limit, or if your circumstances are changing, and it's evident that you'll surpass your estimated annual mileage, it's advisable to contact the finance company. Discuss the possibility of adjusting your mileage limit with them. Alternatively, if you're leasing through GB Vehicle Leasing, feel free to reach out to us, and we'll assist you in this matter.

Adjusting your mileage limit may lead to a change in your monthly leasing fee, but aside from this adjustment, it should have no other impact. This flexibility allows you to ease your concerns and stop fretting about exceeding your agreed miles.

How can I work out my average annual mileage?

Most of us don't have an exact awareness of our yearly driving distances. While personal circumstances may vary each year, we suggest referring to past service or MOT documentation for the most accurate estimate. If you're not currently an active driver, turn to Google Maps for assistance! This tool can help you to determine the distances of your anticipated regular trips, such as commuting to and from work or regular visits to the supermarket. Take note of all the trips you anticipate making in a month and consider adding a slight buffer for unexpected occurrences. After obtaining a monthly figure, multiply it by 12 to get an annual estimate.

What’s the minimum lease mileage allowed?

Every lease agreement stipulates a minimum mileage allowance that you are permitted to select. For the majority of our funders, this minimum typically hovers around 5,000 miles per annum, though some may set it slightly higher. It's crucial to understand that this minimum mileage is not a target; rather, it serves as a baseline. Falling below this specified amount won't yield any financial benefits or bonuses.

What is the average lease mileage?

The typical annual mileage selected by our customers for leasing falls within the range of 8,000 to 12,000 miles per annum. However, it’s important to consider your own driving habits and lifestyle when choosing your contractual mileage.

What occurs If I return my lease vehicle with less than my mileage allowance?

There is no advantage to returning the vehicle to the funder with mileage below the agreed limit. However, if you find that you are not at the minimum mileage allowance set by the funder, there might be an opportunity to adjust the contractual mileage to better align with your actual usage during the lease. Typically, you would need to have a few months remaining on your contract to initiate any adjustments.

About The Author: Charlotte Kennedy

Charlotte joined the GB Vehicle Leasing team around 6 years ago starting out as an apprentice and is now being a key member of our marketing team.

Find Out More About Charlotte

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