One of the most asked questions of the leasing process from personal and business customers is what happens if you exceed the total contract mileage.
As a vehicle gets older, it depreciates in value, and the more miles it has on the clock, the greater the depreciation. When you begin a lease agreement on a new or nearly-new vehicle, you agree to a set mileage allowance throughout the lease with a cost built into your monthly amount. The higher your mileage allowance, the greater the cost.
The reason the annual mileage allowance is in place is so the finance company that funds your lease vehicle can estimate a resale value on your car at the end of the lease contract. What if you go over that mileage agreement? This is when excess mileage charges come into effect.
Excess mileage charges are the fees you pay to the finance provider if you go over your pre-agreed mileage allowance. The more you go over your pre-agreed mileage, the more it will cost you in excess mileage charges. The finance provider calculates the excess mileage charge at a pence per mile rate.