Very often, there is a little trepidation from individuals and businesses when it comes to mileage contracts and leasing.
They are worried that if they do over 8000 miles per annum, they will be penalised – we thought that it would be helpful to clarify what excess mileage is, how it is calculated and why it exists.
Because excess mileage – unlike many may think – is not actually a penalty at all.
Leasing and mileage contracts
The reason that mileage contracts exist at all when it comes to leasing agreements is because of depreciation.
Whether you buy a car or lease one, the amount of miles that you drive will have an effect on the value of the car when you come to sell it on.
Leasing companies know that all cases are different and as such, they calculate the lease amounts per month in line with forecast depreciation over the term.
In other words, they work out your monthly rental based on what impact the miles you drive will have on the resale value of the car, so that they don’t end up with a car that is worth less at the end and you have a fair rental per month.
Are excess mileage charges a rip off?
No – this is something that is not allowed in a regulated industry.
Excess mileage charges must be fair and reasonable and reflect the depreciation on the vehicle that has been caused as a direct result of the customer driving over the mileage they signed up to.
Don’t let your mileage put you off leasing a car
Is your annual mileage stopping you from considering leasing?
If you would like help finding a perfect leasing contract for your annual mileage then please do get in touch by requesting a free of charge call back from our website, enquiring via the quotation or contact page, or calling 0845 148 3012 today!