When subscribing (or leasing) to a vehicle service, one crucial aspect to consider is the mileage allowance. Most car subscriptions come with a predetermined limit on the number of miles you can drive during the term. But what happens if you exceed the limit?
That’s where the excess mileage charge comes into play. In this article, we will explore what an excess mileage charge is, why it exists and provide some examples of typical charges to help you understand it’s impact.
What is an excess mileage charge?
An excess mileage charge is a fee that is applied when you drive more miles than the predetermined limit set out in your vehicle subscription agreement. It is essentially a penalty for exceeding the agreed-upon mileage allowance. This charge is assessed at the end of your subscription.
Why do Excess Mileage Charges Exist?
Excess mileage charges exist to account for additional wear and tear a vehicle experiences when driven beyond the agreed-upon limit.
Mileage affects the vehicle’s condition, lowers its resale value and increases maintenance requirements/costs. By charging excess mileage, subscription providers compensate for these factors and ensure that the vehicle’s condition remains within acceptable limits.
How are excess mileage charges calculated?
Excess mileage charges are usually calculated on a per-mile basis. The specific cost is determined by the subscription provider and will be clearly outlined in your agreement.
The charge can range anywhere from a few pence to several pounds per mile, depending on the terms of the subscription and the make/model of the vehicle. It is really important to read through all of the contracts before signing.
Examples of Excess Mileage Charges
To give you some idea of excess mileage charges, we have illustrated some examples below:
Example 1
You subscription agreement allows 12,000 miles per annum (1,000 miles per month). At the end of the 12 months, you have driven 15,000 miles in the car. This means that you have driven over the agreed mileage by 3,000 miles. Assuming an excess mileage charge of 65p per miles, would result in a charge from the subscription company for £1950 (3000 miles x £0.65).
Example 2
Your subscription agreement allows you 800 miles per month and you keep the vehicle for 140 days. You have driven 4,000 miles during this time. By using a calculation using one of the flexible car subscription companies, you would be allowed a mileage allowance of 3682 over the 140 days (monthly mileage allowance x 12 / number of days). This would result in a penalty of 318 miles at a rate of £1.25 per mile and a charge of £397.50.
Example 3
You receive a monthly mileage allowance of 1,500 miles and you take the vehicle for 3 months. In month 1 you do 2,000 miles, month 2 1,000 miles and month 3 1,500 miles. At the end of the contract you have done a total of 4,500. Despite you going over in the 1st month, your driving miles dropped in the 2nd and corrected itself. In this case the vehicle subscription company will not levy any penalties. Be careful, if you agree to take the vehicle for 3 months and then the provider requests a swap and you are over mileage, you may get charged an excess mileage charge.
How do you minimise Excess Mileage Charges?
To avoid or minimise excess mileage charges, it’s crucial to carefully estimate your driving before enetering into a vehicle subscription agreement. Consider your average monthly or annual mileage and select an allowance that aligns with your anticipated usage.
If you find yourself approaching the limit, reach out to the subscription provider to see if you have the option of purchasing additional miles upfront or negotiate higher mileage allowances. This can not be done when the vehicle has been returned.
Don’t get drawn in by the lower price with lower miles, when you know that the miles included within the agreement won’t be sufficent.
Conclusion
Excess mileage charges are an importan aspect to be aware of when subscribing (or leasing) a vehicle. By understanding what excess mileage charges are, why they exist and the potencial costs involved, you can better plan and manage your driving habits to avoid additional expenses.
ALWAYS review your subscription agreement before signing and consider your expected mileage to ensure a smooth and cost-effective experience throughout your vehicle ownership or subscription journey.
Excess mileage charges can be a little higher than traditional car leasing rates, but you don’t get the flexibility built-in.
Compare Car Subscriptions & Deals
See the latest car subscription deals on our website from a select number of providers or compare the subscription providers and their services and restrictions. Not all providers advertise their excess mileage charges so make sure you either ask the question or peruse their frequently asked questions.
