Going over your miles on an auto lease could lead to paying more when you return the vehicle. Sometimes a lot more.
Leasing means that you only pay for the portion of the vehicle you use, but there are strict requirements that go along with leasing, like mileage limits.
Lease mileage overage forgiveness, where a leasing company waives the fees for over-mileage charges, is very rare, so don't expect your lessor to erase those overages. If there is overage forgiveness in your contract, it may come with stipulations such as purchasing the vehicle at lease end.
What Are Lease Mileage Limits?
Leasing contracts come with mileage restrictions. Mileage limits are a predetermined number of miles that you can put on the vehicle, without impacting its pre-set residual value.
This is mainly because leasing companies want to control the amount of depreciation, or loss of value, that their leased vehicles experience during a lease term. Usually, this is with the intention of selling the previously leased car as a certified pre-owned (CPO) vehicle.
Mileage limits typically fall between 7,500 miles and 12,000 miles per year. There are some low-mileage leases with lower limits, like 5,000 miles per year, while a common mileage allowance for many leases is 10,000 miles per year.
What Happens if You Go Over Miles on a Car Lease?
If you go over mileage on a lease, you can put extra wear and tear on the mechanical parts of the vehicle, which can ultimately affect how much the vehicle is worth at lease end. To make up some of this cost, lessors charge over-mileage fees, which can range in cost but are around 25 cents on average.
This can add up quickly. For example, if you put an additional 10,000 miles on your lease, you're likely to owe $2,500 at the end of your lease contract.
Options to explore for saving money when you're already over the mileage on your leased car are:
- Keep the miles off your car by joining a ride share, or taking public transportation to and from your work, or to run errands.
- Buying your car at lease-end. If you purchase your leased vehicle, you won't have to worry about the over mileage charges, which are typically waived when you buyout the lease.
If you're just taking on a lease and you know you rack up the miles on the road, it's a good idea to purchase additional miles upfront. Be careful when you estimate how much you plan to drive, though, since you won't be reimbursed if you don't use the extra miles you buy.
Buying miles upfront typically cuts costs down to a more manageable 10 or 15 cents per mile, rather than the 25 or 30 cents per mile that is common when you have to pay overage fees.
If you plan on leasing again, pay attention to how much you drive so you don’t overbuy miles or underestimate how much you drive – either miscalculation can cost you.
Tips and How to Stay Under Mileage on Your Car Lease
When you take on a leased car, you agree to certain terms and conditions, such as the mileage limit. Knowing this, it's a good idea to drive as little as possible if you know you're a frequent traveler. When possible, have someone else drive, or hitch a ride with someone who's going your way, like friends going to a party, or neighbors going to the grocery store.
- If you’re already over your mileage limits and your lease isn’t over, consider paying for another form of transportation or using a family member’s car to mitigate mileage on your lease. Work from home, if possible, to decrease the miles put on by a commute. Use a taxi or ride-sharing service to get around. If the cost of getting a ride from someone else or using a ride-sharing service is less than your projected over-mileage fees, then they could be good options to consider.
- If you buy it, you can say bye-bye to those over-mileage fees. It’s a good option to consider if you’re excessively over the limit. Your leasing contract should include the leased car’s buyout price. Now may be an especially good time to buy out your lease. This is because your buyout price is set at the beginning of your lease. In some cases, you might find that your buyout price is far lower than the current residual value on your lease.
- If you’re already over miles and don’t want to purchase the vehicle, it’s a good idea to start saving for the extra money now so you aren’t scrambling to repay the fees at the end of the lease. Review your leasing contract to see what you're charged for over-mileage fees, so you can plan accordingly.
Leasing vs. Financing
If you’re a frequent driver and tack on the miles, then financing a vehicle may be your solution. Many borrowers choose to lease over financing because monthly lease payments on a new car tend to be less expensive than financing a brand-new vehicle. But if you’re always having to buy extra miles because you drive a lot, you might not be saving much money overall.
Auto financing can also be an easier route for bad credit borrowers, as well. Many leasing companies require borrowers to have a good credit score to qualify, typically requiring a credit score above 670 or possibly in the 700s. If your credit score isn’t great, you may have a better chance of qualifying for an auto loan over a lease.
