Car leasing: How many miles can you put on a leased car?

If you’re considering a car lease, mileage is an important part of the agreement to be aware of. All lease car deals will be advertised with an annual mileage which you can adjust to your specific needs. But what happens if you’re somebody who needs some wiggle room? So begs the question: how many miles can you put on a leased car?

You don’t have to be reluctant to lease a car due to mileage restrictions. Here, we break down how mileage works and the types of lease deals available for drivers who clock a mighty number of miles on the odometer.

What is mileage and how does it work?

A car lease, better known as personal contract hire (PCH), will have an annual mileage limit. This also applies for companies who lease a fleet of vehicles via business contract hire.

The reason for mileage restrictions is because when you sign a PCH deal, you are agreeing to pay the difference between the car’s cost at the start of your lease and what it will be worth at the end of your lease. This is known as the vehicle’s residual value.

The number of miles on the odometer will impact the rate of depreciation and therefore this residual value, meaning the more miles you drive, the lower the residual value of the car at the end of your lease.

This is precisely why an annual mileage limit is set for each lease agreement. Your finance provider aims to ensure that your monthly payments will offset the cost of depreciation.

Lease deals can start with an annual mileage limit as low as 5000. A reduced annual mileage allowance means lower monthly payments, which can be enticing for many drivers. Special offers and low-cost deals often come with a lower mileage, like this brand new zero-deposit Audi A1.

However, when leasing a car, you need to be realistic. If there is a good chance that you will surpass your annual mileage allowance, it might be more beneficial to opt for a deal that offers more miles. In the long run, this can be more cost-effective in comparison to if you had to pay the heft excess mileage charges for driving over the agreed limit.

Many car leasing companies are aware that every driver is different with individual lifestyle and requirements. Therefore, restrictive mileage won’t work for everyone. And there are bespoke deals for those who want mileage flexibility.

What is a High Mileage Lease?

If you know that you’ll be clocking the miles up fast, a high mileage lease is a good option.

A high mileage lease is an agreement that includes a greater annual mileage limit. You can choose an annual allowance of anywhere from 18,000 to 40,000 miles.

The biggest pro here is that you’ll avoid paying expensive excess mileage charges at the end of your contract. However, be prepared to make higher monthly payments. This is due to the car’s potential higher rate of depreciation because of the greater number of miles you’ll be driving. 

Nevertheless, you will still enjoy all the other benefits of leasing a car. If you don’t want to worry about paying hefty premium for excess miles, and you know that you’re likely to be putting more miles on the odometer, a high mileage lease deal would be ideal for you.

Pros Cons

What is an Unlimited Mileage Lease?

An unlimited mileage lease is rare – but it does exist. Most unlimited mileage PCH deals can only be offered on used cars.

Unlimited mileage contracts are an expensive option. As mentioned earlier, the number of miles a car has clocked effects the rate of depreciation.

This means that the finance company can’t estimate how many miles you’re likely to drive before you return the car to them. Hence, your monthly payments will be a lot higher as you’ll be paying for the maximum amount the car may depreciate.

In most cases, you will end up paying very close to the full market value of the vehicle with no equity left at the end of your leasing term.

For that reason, leasing probably isn’t the best option for drivers in need of this type of flexibility.

Will I be able to upgrade to a higher mileage limit during my car lease?

If you find yourself in a position where you’ll need to drive more miles at some point during your car lease, you can apply for a “mileage extension”.

A mileage extension is a formal change to your contract. Simply, it allows for an increase in your annual mileage allowance. How much you can increase it by depends on the terms and conditions set by the finance company. Also note that you will likely incur an additional charge for making changes to the lease agreement before it ends.

You will receive a new contract detailing the increased mileage limit and the higher monthly price.

Be aware that not all finance providers offer mileage extensions. You should check before signing your lease contract if the finance company will allow mileage extensions.

I have poor credit – can I still get a high mileage lease?

At Zero Deposit Car Leasing, we work with a panel of lenders who consider applications from different credit backgrounds. 

You may want to appoint a guarantor for your car lease or implement ways to boost your credit score.

What to consider before choosing a high mileage lease

You should enquire about an extended manufacturer’s warranty. A standard warranty may only cover you up to a certain number of miles.

Another thing to consider is choosing to include maintenance with your lease car agreement. Having maintenance included allows you to keep the car in good condition too.

If driving is a big part of your every day, a high-mileage contract with all the benefits of a low-mileage lease will ensure you have that extra security and avoid substantial excess mileage charges.  

For businesses, a high mileage lease may be more beneficial. Read our article: How to get a business car lease – and is it right for you? for more helpful information.