Mileage Limits and Overage Charges in Car Leases Explained

When you lease a car, you’re not buying it-you’re paying to use it for a set time. Most people think that means they can drive as much as they want. But that’s not true. Every lease comes with a mileage limit, and if you go over it, you pay. A lot.

What’s a Mileage Limit in a Car Lease?

Every lease agreement includes a yearly mileage allowance. This is the number of miles you’re allowed to drive each year without extra fees. Common limits are 10,000, 12,000, or 15,000 miles per year. That’s about 275 to 415 miles a week. If you drive more than that, you’ll get charged at the end of the lease.

Why do they do this? Leased cars are returned in good condition. The value of the car at the end of the lease depends heavily on how many miles it’s done. A car with 50,000 miles is worth more than one with 100,000. So the leasing company sets a limit to protect their investment.

How Are Overage Charges Calculated?

Overage charges are usually between 15p and 25p per mile in the UK. That might sound small, but it adds up fast. Let’s say you leased a car with a 12,000-mile annual limit for three years. That’s 36,000 miles total. If you drove 45,000 miles, you’re 9,000 miles over. At 20p per mile, that’s £1,800 extra. That’s more than some people pay for a used car.

These charges are set in your contract before you sign. They’re not negotiable after the fact. Some dealers try to hide them in fine print. Always check the mileage section before you put your name on the dotted line.

What Happens If You Go Over?

At the end of your lease, the dealership will check the odometer. If you’re over, they’ll send you a bill. You can pay it right then, or they’ll add it to your final invoice. Some companies let you pay in installments, but you’ll still owe the full amount.

Don’t assume you can avoid it by trading in early. Leasing companies track mileage from day one. Even if you return the car early, you still pay for every mile over your limit. And if you don’t pay, they’ll send it to collections. That hurts your credit score.

How to Avoid Overage Charges

The best way to avoid overage charges is to know your driving habits before you sign. Ask yourself:

• How many miles do you drive to work each day?
• Do you take weekend trips or holidays?
• Do you carpool or use public transport sometimes?

If you drive 50 miles a day for work, that’s 12,500 miles a year. A 10,000-mile limit won’t cut it. You need 15,000. If you’re unsure, add 20% to your current mileage. That’s a safe buffer.

Some dealers let you buy extra miles upfront. You pay less per mile-often 10p to 15p-than you would at the end. For example, buying 10,000 extra miles at 12p each costs £1,200. If you end up going 9,000 over, you save £600. That’s smart planning.

What If You Under-Drive?

Some people worry they’ll waste money if they don’t use all their miles. Don’t. You don’t get cash back. But you also don’t pay anything extra. If you only drove 8,000 miles a year on a 12,000-mile lease, you’re fine. The unused miles don’t cost you anything. They just sit there.

Leasing isn’t about getting value back-it’s about predictable costs. You pay for the car’s depreciation, not how much you drive. If you drive less than average, you’re actually getting a better deal. The car holds more value, and the dealer benefits more than you.

How to Check Your Mileage During the Lease

Don’t wait until the last week to find out you’re over. Track your mileage every few months. Use your car’s trip computer, a phone app like Mileage Log, or just write it down every time you fill up. Most modern cars show total mileage on the dashboard. Check it every time you refuel.

If you’re 3,000 miles over halfway through a three-year lease, you still have time to adjust. Drive less. Carpool. Take the train. It’s better than paying £600 later.

Lease End Inspection: What to Expect

Before you return the car, the leasing company will do a full inspection. They’ll check the odometer, the tires, the bodywork, and the interior. Mileage is one of the first things they look at. They don’t guess. They record the exact number. No exceptions.

If you’re close to your limit-within 1,000 miles-you might want to buy a few extra miles ahead of time. It’s cheaper than paying at the end. And if you’re way over, talk to your dealer early. Sometimes they’ll offer a discount if you’re planning to lease another car from them.

Is a Higher Mileage Lease Worth It?

Yes-if you need it. A 15,000-mile lease costs more per month than a 10,000-mile one. But not by much. On a £300/month lease, going from 10k to 15k miles might add £20-£30 to your payment. That’s £720-£1,080 extra over three years.

Compare that to paying 20p per mile for 15,000 extra miles: £3,000. That’s a huge difference. Paying a little more upfront saves you a lot later. If you drive more than 12,000 miles a year, a higher mileage lease is almost always the better choice.

What About Electric Cars?

Electric cars have the same mileage limits as petrol or diesel ones. But they’re often used differently. People who drive EVs tend to use them for daily commutes, not long trips. That means many EV lessees stay under their limits.

Still, if you use your EV for road trips or delivery work, you can easily hit 15,000 miles a year. Don’t assume electric means less mileage. The rules are the same. Check your contract. Track your miles. Same as always.

Final Tip: Know Your Contract

Read your lease agreement before you sign. Not just the monthly payment. Look for the section that says "Mileage Allowance" and "Excess Mileage Charge." Write those numbers down. Keep them somewhere safe.

Most people focus on the monthly cost and forget the hidden fees. That’s how you end up with a £2,000 surprise bill at the end of your lease. Don’t be that person. Know your limits. Track your miles. Plan ahead.

Leasing can be a smart choice if you understand the rules. Mileage limits aren’t traps-they’re part of the deal. Treat them like a budget. If you stick to it, you’ll walk away without any nasty surprises.