S Shelford of Essex asks; What is the industry standard charge for excess mileage on a lease car? – We answer this and more on AE Answers.
The industry standard for excess mileage charges on lease cars can vary from funder to funder, however, on many of the long term contract hire offers, you will find the excess mileage charge to be between 3p and 30p.
The industry average for 24, 36 and 48 month car lease agreements is 20p plus VAT (this is correct as of 4th February 2020.
On Short Term Car Leases the excess mileage charge is usually much higher and can be between 25p and £2.75 depending on the vehicle. The industry average excess mileage for short term car leases is 55p plus VAT.
The reason short term contract hires are more, is that the cars have a steeper residual value drop and the mileage can have a massive effect. One of the highest excess mileage charges levied tends to be Audi’s, due to strict buyback conditions.
When you return your lease car to a funder, the collection driver will check and make a note of the mileage on the odometer. The funder will then calculate the mileage driven during the contract against your contracted allowed mileage.
If you have driven more miles then the contracted mileage, then the funder will charge you an excess mileage charge. Depending on the lease company/funder, this can range between 3p and £2.75 plus VAT per mile, depending on the car, length of contract, etc.
Some funders have stepped excess mileage, where the rate will increase the more miles you ave done. For instance one funder states in their contract that should your mileage be 10% over the contracted mileage, the excess mileage rate will increase by 50%.
Some also have terms written into the contract that should the excess mileage amount be a substancial amount, then you maybe forced to purchase the car, as the car is deemed unsellable via their usual channels.
Yes, each funder, vehicle and contract length can have completely different excess mileage charge.
Long Term (24, 36 and 48 month contracts) will have a lower excess mileage charge than Short Term Leases (3, 6, 9 and 12 Month Car Leases).
Cheaper deals are usually advertised with a lower annual mileage and it would be a huge mistake if you took one of these offers, knowing that you will go over the mileage allowance.
If you are part way through your current car lease and over your agreed mileage, then its alwaysbest to ring the leasing company and find out how much it would be at that point to increase your mileage.
It doesn’t always work out cheaper to take the increased rate. So make sure you do the math, calculate the estimated mileage, the difference in rental and what you’d pay if you handed the car back over the mileage allowance.
Further information on Excess Mileage
- Excess Mileage Charges Explained – Nationwide Vehicle Contracts
- Excess Mileage Charge Explained – Lease Fletcher
- What are yearly mileage and Excess Mileage Charges? – What Car