The reason for annual mileage limits in car and van leasing is the vehicle depreciation. Depreciation is simply how much your vehicle is worth after a period of use. As it gets older and used more, every van or car depreciates. Plus, the more miles it has on its clock, the greater the depreciation, which means it decreases in value. When you lease a vehicle, depreciation is taken into account and is included in your monthly rental payments.
With the annual mileage allowance in your finance agreement, your funder can estimate the residual value of your vehicle once the lease period is over - in other words, the value of the vehicle after you return it. Using the depreciation (difference between the value of the vehicle when brand new and its value when returned), the funder calculates your monthly rental payments. Therefore, higher mileage allowances result in higher monthly rentals. If you go over your mileage allowance on a leased vehicle, you'll have to pay the Excess Mileage charge.
Not sure how to set your van leasing deal annual mileage limit? Click below.
DECLARING ANNUAL MILEAGE
Need help? Get in touch!
CONTACT US
