What Are Excess Mileage Charges?

Excess Mileage Charges refer to additional fees imposed on a lessee when the actual mileage driven on a leased vehicle exceeds the predetermined mileage limit specified in the lease agreement. These charges are designed to compensate the lessor for the additional wear and depreciation associated with higher mileage.

Explanation: When entering into a car lease, lessees agree to a predetermined annual mileage limit as part of the lease terms. If the lessee exceeds this mileage limit during the lease term, they are subject to Excess Mileage Charges, which are typically outlined in the lease agreement. These charges are meant to account for the accelerated depreciation and wear on the vehicle caused by higher-than-expected mileage.

Examples: Suppose you sign a car lease with an annual mileage limit of 12,000 miles for a three-year lease term. If, at the end of the lease, the odometer indicates that you have driven 40,000 miles instead of the allotted 36,000 miles (12,000 miles per year x 3 years), you would exceed the agreed-upon mileage limit.

The lessor would then apply Excess Mileage Charges, which are typically specified in cents per mile. For example, if the Excess Mileage Charge is $0.15 per mile, you would incur charges for the additional 4,000 miles beyond the limit. In this case, the excess mileage charges would amount to $600 (4,000 miles x $0.15 per mile).