You may have come across the term excess mileage charges while looking for a new lease car but have no clue exactly what it means. No problem, check out the guide below which looks at annual mileage and excess mileage charges to help soothe any mileage worries you might have...
When you want to take out a lease contract, you will need to decide upon an annual mileage amount as well as a term length to generate the lease price we offer. This mileage amount is the number of miles you need to stick to throughout your leasing contract otherwise you will occur excess mileage charges.
The annual mileage amount is agreed to determine the residual value of the car when it is returned at the end of your contract. If you go over this amount it will affect the calculated residual value so you will have to pay the difference to compensate this. Another thing to note about annual mileages is that if you are way below your agreed amount, you do not get any money returned to you at the end. It is best to find the correct mileage amount for you, so that you aren’t wasting money by going under or spending more than you think by going over.
You should also be aware that you don’t have to stick to your annual mileage amount, year by year. If you have a 4 year contract with 8,000 miles per year, you can travel 5000 in the first year, 12000 in the second, 8000 in the third and 7,000 in the last. Your mileage is checked at the end of the contract term so as long you stay under the total mileage amount (Number of Years x Annual Mileage) you will not have to pay any excess mileage charges.
The cost of the excess mileage charges differs between finance companies and in some cases the manufacturers and models they offer. For example, the excess mileage charge for a Kia EV6 is roughly 15p per mile while the excess mileage charge for a Nissan Qashqai can be as low as 10p per mile.
The excess milage charges can also differ depending on the annual mileage amount and term you choose for your contract. So, if you would like to know the excess mileage for your chosen term, just speak to your sales consultant who will find out the excess mileage figure and let you know.
Before you start your leasing journey, you need to select the most appropriate and cost-effective mileage amount that works for you so that you don’t incur excess mileage charges. To start off we recommend calculating your average mileage for your weekly journey - your work commute, any shopping trips, school drop-offs/pick-ups etc. Then you also need to consider any spontaneous trips that you may have like holidays, day trips, work meetings etc. Once you have a mileage amount that you feel comfortable with and think is the most appropriate for you, you can look to see which lease deal suits you the most!
After your contract has gone live, you may have a change in circumstances (such as moving house or changing jobs) which may result in you doing more or less miles over the year. If you would need to change your mileage amount during your lease term, you can get in contact with your finance company and apply for the mileage allowance to be changed. This is a formal change to your contract which means that your annual contractual mileage can be changed, and your rental can be changed to reflect this.
If the finance company permits the change, you should get new documentation that confirms the mileage change and provides you with a new monthly rental. Please be aware that a mileage amendment may not be available for every contract as it is the finance company’s decision to allow any changes to the contract. We always recommend that you select the most appropriate mileage amount at the start of the contract, so you won’t be disappointed.
If you have any questions about excess mileage or want to know what your excess mileage amount would be for your lease deal, you can get in contact with us on 0345 350 3776, email us at email@example.com or send us a message on our online chat service.