Car leases are written with a specific amount of miles that are to be driven each year. The lease contract limit is the total amount of miles per year, multiplied by the number of years in the lease. For example, on a 3-year lease at 12,000 miles per year, the mileage limit on the lease is 36,000 miles. If the car is driven more miles before the end of the lease, there will be an over mileage charge.
Excess Mileage Charge
An automobile lease contract will specify the amount of the charges if the car is driven more than the contract miles. The charge will be listed as an amount per mile. Typical excess mileage charges are 15 to 25 cents per mile. If the car is turned in to the leasing company at the end of the term, the lessee or car owner has to pay the amount of any excess miles multiplied by the mileage charge.
Serious Money
The excess mileage charge on a lease can add up to a significant amount of money if the lessee did not control the number of miles driven. If you turn in a car with 50,000 miles on it, but the car lease had a contract limit of 36,000 miles and a 20-cent-per-mile excess mileage charge, it will cost you an additional $2,800. It is possible for someone who leased a car, with a low mileage lease contract and high driven mileage, to pay $5,000 or more to turn in the leased car.
Controlling Excess Mileage Charges
A driver with a leased vehicle must be aware of the mileage limits. The first step is to select a lease with mileage that corresponds with the amount of miles you typically drive in a year. A low mileage lease should not be selected just to get a lower payment. If the driver knows she will drive more miles, it is possible to buy excess miles up front and have them included in the lease contract. Upfront miles cost less than the excess mileage charge and some leasing companies will return the money if the miles aren't used.
Minimizing the Damage
If a leased car has been driven high miles with a significant number of months left on the contract, consideration should be given to trading the car in early. For example, a lease car has reached the mileage limit with 6 months left to go on the lease. The car is being driven 2,500 miles per month; the monthly payment is $400; and the excess mileage charge is 20 cents. If the car is driven to the end of the term, the cost will be $2,400 in lease payments plus $3,000 in mileage charges. The car could be traded in now and the $2,400 in remaining payments due rolled into a new purchase or lease. Getting out of the lease early would save the $3,000 in excess mileage charges.
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