Potential Pitfalls

The Truth about Excess Mileage

Leasing is becoming increasingly popular these days as SMEs, large organisations and individuals are all looking for ways to fix the cost of their motoring expenses.

The Truth about Excess Mileage

Is your annual mileage putting you off leasing a car?

Leasing a vehicle is usually much easier on the pocket than buying one outright – the initial outlay tends to be much lower than the traditional 10% HP down-payment and the monthly lease payments are also a lot less than when a vehicle is financed outright.

There is still the age-old argument where people question why you would want to pay monthly for a car and never own it – my response to this is always that bricks and mortar can go up, but cars very rarely do. I feel that in most instances, it is a much better idea to at least know what you are going to lose at the outset; and pay as little as you can to drive the car that you want.

Car leasing is also a great way to drive a brand new car; because of the higher monthly payments that go hand in hand with buying a car on finance, a lot of people end up running a used car to keep costs down. This can inevitably mean more servicing costs, warranty worries, road tax bills and of course, as new cars are getting incredibly frugal almost by the month, much bigger fuel bills.

One of the main reasons that some people still cling onto buying a car outright as their vehicle acquisition method is because of mileage. Quite simply, they are worried that they will be penalised for driving more than 10000 miles per annum if they lease a car.

Will you get “stung” by excess mileage charges?

Once upon a time, finance companies weren’t quite as cute as they are now when it comes to excess mileage. It was common practice for customers to identify lease agreements with very low excess mileage charges, take out a 10k per year mileage contract, then pay a very low excess mileage charge at the end of the term.

Of course, this meant that the finance companies lost out. And they certainly don’t intend to make any repeat mistakes.

Nowadays, when you get a quotation on leasing a car, your mileage estimation will be factored in to your monthly payment. The adjustment will be commensurate with the depreciation scale on the vehicle – it is not a penalty.

If you go over-mileage, you will be paying an excess mileage charge that has been calculated in accordance with running cost data. Again, it is not a penalty; it is a charge that reflects the difference in value that the vehicle has dropped due to any extra mileage that has been driven.

Low mileage contracts

Interestingly, as driving patterns are changing here in the UK, many funders are dropping their annual mileage threshold to reflect this. People are now driving less and now many finance companies will offer annual mileage allowances of 8000 miles; some even go as low as 5000 miles.

Taking on a low mileage contract is actually a great opportunity for anyone looking to lease a car who does indeed drive less than 10k per annum; if you do go over, you know that you won’t pay the price with a huge, unwarranted bill.


If you still consider excess mileage to be a bit of a rip-off and would prefer to stick to owning your car, that is, of course, your choice. Leasing a car is not for everyone.

But if you think that excess mileage is a “con”, I would hope that this piece has prompted you to reconsider your thoughts on the whole practice of excess mileage charging.

It is a fact that the more miles you drive, the more your car will lose. Now that the excess mileage pence per mile charges are truly representative of the running costs of each car, it allows the funder to redress the balance when the car comes back. Obviously, they are not in the business of losing money and each lender does have a duty to mitigate losses.

If you own your car and drive more miles than you originally expected to when you bought it, you will lose the same amount of money. The only difference is that you won’t actually know how much more you have lost until you come to sell it on.

Debbie Motor Mistress Blog, Top 10 Car Depreciation Facts

Find out More!

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