What is the Excess Mileage charge, and how is it calculated?

What is the Excess Mileage charge, and how is it calculated?

What is the Excess Mileage charge, and how is it calculated?
20 May 2022

When you return the vehicle to the funder at the end of your contract, it will undergo a process to determine its condition, which includes an odometer check. The finance company will then calculate how much mileage you have exceeded your agreed mileage and charge you for it. The excess mileage charge is set in your finance agreement and should be checked before signing.

Excess charges can range from about 6p to £1 plus VAT per mile above your agreed limit, depending on your finance company and vehicle model. There are some funders that increase the excess mileage charge, i.e. your excess mileage can be 6p per mile up to 10% of your contracted mileage, and 9p for any additional miles.

For example:

Mr Smith had a Citroen Berlingo on a 3 years van contract hire with a yearly mileage allowance of 10,000. His total mileage allocation for the duration of the agreement was therefore 30,000. At the end of the agreement, Mr Smith returned a van with 35,000 miles on the clock. As per his agreement, the excess mileage charge was 6p per mile, so the finance company calculated Mr Smith had to pay £300 (5,000 miles x 6p) + VAT in extra mileage charges.

Click below to find out how to choose the right mileage allowance so you can avoid the excess mileage charge.


Please get in touch if you have any questions.


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