Quick Facts About Lease Mile Overages
- Turning in your leased car early or buying the vehicle at lease end are two options that could benefit you if you exceed the mileage cap.
- The mileage allowance in the lease contract is just as important as the other financial considerations, such as the monthly payment.
- Low-mileage leases have lower monthly payments, but they are not a good option if you spend considerable time on the road.
So you decided to lease a car, and now you realize you’re going over the mileage limit. This problem happens frequently because many drivers underestimate how much they travel. Suppose you log 1,000 miles per month while your 3-year lease allows 10,000 annual miles and charges 20 cents per mile over that. In that case, you’ll owe $1,200 for excess mileage when the contract ends.
What do you do when you face stiff penalties for driving too many miles in your leased car? We’ll tell you about all your options, including what happens if you exceed the allowed miles in your car lease, how much it could cost you, and tips on how to avoid this problem.
- What Happens if You Go Over Miles on a Car Lease?
- How Much Do the Extra Miles Cost in a Car Lease?
- Is It Better to Buy or Lease?
- How Can I Avoid the Car Lease Mileage Trap Before Signing?
- How Much Do Miles Matter?
What Happens if You Go Over Miles on a Lease?
When you lease a car, you agree to use it for a specified duration, drive up to a certain number of miles, and then return the vehicle in good condition when the contract ends. What happens if you go over the agreed-upon mileage limit?
The leasing company will charge a fee for each mile you exceed the mileage cap. That penalty is part of the fees collected when you turn in the vehicle. While paying the mileage overage cost is the most straightforward choice, other solutions might be easier on your wallet.
Here are a few options to consider if you are close to going over or have exceeded the mileage on your lease.
1. Turn in the Car Early
Due to economic factors, some dealers may want you to turn in the leased vehicle early. Used car supply is improving, but inventory remains thin compared to pre-pandemic levels.
High prices for new models and elevated loan interest rates push many buyers to off-lease used cars. A dealership might need to add your vehicle to the stock on its lot. If turning in the car is your only option because you can’t afford to pay the overage fee, this may be worth a look.
However, you’ll need to line up another vehicle to get into before you turn over the keys. Be sure to look at private sellers to expand your options for a replacement car.
2. Buy the Car
One of the best ways to escape the overage charges is to negotiate a lease buyback at the end of the term if your budget allows. If you turn in your car and find you owe thousands of dollars in extra mileage fees, you may be better off just using that as a down payment for the vehicle. Otherwise, you spend thousands of dollars and walk away with nothing.
Depending on the residual value stated in your lease contract, buying the car could work out in your favor. If you purchase your leased vehicle and then sell or trade it, you might come out ahead. See more about trading the car below.
3. Trade the Car at a Dealership
Some leasing contracts allow you to trade your leased vehicle at any dealership. Most dealerships will be happy to obtain a newer vehicle they can add to their used car inventory and handle all the paperwork for you. Before you trade, check the vehicle’s value to know what you’re working with before you head to the dealership.
Some contracts may require bringing the vehicle to the original dealership where you leased the car.
4. Pay the Fee
When trying to solve your leasing problem, paying the fee for driving the extra mileage may be cheaper. To do this, you will need to research your lease terms and determine the over-mileage penalty for your lease. Here, you will find the total allotted miles and the penalty per mile you drive over. Most leases require you to pay anywhere from 15 cents to 25 cents per mile.
This option won’t significantly hurt your wallet if you’re slightly over the mileage limit, but fees can add up quickly. For example, if your 3-year agreement states you must pay 15 cents per mile over 12,000 annual miles, and you drove the car 13,000 miles each year of the lease, the extra 3,000 miles will cost you $450. If your rate is 25 cents per mile, the cost rises to $750.
You may find an easier fix with the earlier options mentioned above.
5. Stop Driving the Car
It sounds simple, but this option is not always feasible. If you close in on your mileage cap near the middle or end of your lease, try reducing your weekly drive time. It may be more challenging than it sounds, but carpooling with friends or taking public transit could pay off for you in the long run.
Examine your driving habits to see if hitching rides with friends or family is doable with your daily commute and errands.
How Much Do the Extra Miles Cost in a Car Lease?
Most companies charge 15 to 25 cents per mile for overages, and some leases charge 30 cents per excess mile.
While monitoring the miles on your leased car is essential, going a few hundred miles over the limit might not be too bad.
Is It Better to Buy or Lease?
Buying and leasing depend on your circumstances and preferences. While both have pros, they also have cons.
Why Lease?
Leasing is an excellent option to consider due to vehicle price increases that put new and some newer used models out of reach. Leasing also works well for buyers who can’t afford a large down payment. For some, leasing offers the chance to drive new cars every few years.
When you lease, you typically keep the vehicle for three years. Then, you can pick a new car to drive when the lease is up. And if you still want the car after years of driving it, you will have the option to buy it.
Along with the ability to switch cars often, you will pay a much smaller down payment, if at all, saving thousands on upfront costs. And maybe one of the best perks will be your lower monthly car payments. Leasing is less expensive than buying because you only pay for the car’s depreciation, not the actual vehicle and interest.
However, a lease may not work for everyone. When leasing, you pay for a car you don’t own. As a result, you cannot make any upgrades or modifications to the car because it’s not yours. Along with this, you may need to restrict your driving habits. You are limited to a certain amount of miles during your lease, and if you go over that, you pay a fee for every mile over. Once you complete your lease contract, you are back at square one. You will either need to lease another vehicle, buy the one you have been leasing, or walk away and start over with something else.
MORE: 5 Reasons Why You Should Buy Your Leased Car
Why Buy?
Buying is your best bet in most cases. When you buy a car, whether financing or paying cash, eventually, you will own the car. Purchasing a vehicle is the most attractive choice for prospective car shoppers. Unlike when you lease a car and turn it back in, you will have ownership when buying a vehicle after your payments. You can customize the car even if you are still making payments. You have the freedom to drive as many miles as you wish.
There are a few cons to this option, though. For starters, you will be paying interest on the car if you use financing for the purchase, and your monthly payments will be significantly larger. With higher monthly payments, you will need to put down between 10% and 20% of the car’s cost, which can be expensive. So, while you will own the vehicle, you will spend much more money.
MORE: Leasing a Car: What Type of Damage Will You Be Charged For?
How Can I Avoid the Car Lease Mileage Trap Before Signing?
Here are some mileage tips to consider before deciding to lease your next car. Because let’s face it, some aspects of leasing are similar to negotiations when buying one. All negotiations must occur upfront. And the contract’s mileage allowance can be just as important as the price.
Tip 1: Prioritize Mileage Needs Before You Sign a Lease
When leasing a car, it’s easy to prioritize the principal amount and upfront fees. But realistically, considering mileage limits is the bigger deal-breaker. Since spending less per month is the primary motivation for leasing a car, remember that your lease payment will increase with higher mileage. So, knowing how many miles you drive per year is very important before ever deciding to lease.
Calculate the number of miles you think you’ll need on a 3-year lease. The latest figures from the United States Department of Transportation Federal Highway Administration indicate the average driver puts about 14,489 miles yearly on a car.
So, start by considering your driving habits for the past three years on your existing car. Then, divide the total miles driven by 36 to get your monthly and yearly goals. Think of other factors like driving vacations or regular visits to family out of town. Put in a 5% to 10% cushion for unexpected mileage, and consider whether the car lease offers the number of miles you need.
Tip 2: Consider a High-Mileage Car Lease
If all the traditional reasons you want to lease a car still make sense to you, but the mileage is too limiting, ask for a high-mileage lease. Although the whole point of leasing versus buying a car is getting a lower payment, when 10,000 to 13,000 miles per year is not enough, you’ll pay more per month to add miles. Therefore, you should proceed with caution and analyze your decision carefully before signing a high-mile lease.
What Is the Highest Mileage Lease You Can Get?
A high-mileage lease that might still make sense is a 15,000- to 30,000-mile annual lease. For that, you will pay 40% to 50% more per month. And if you decide to push beyond 30,000 miles per year, at that point, leasing ceases to make sound financial sense. Remember, a lower monthly payment is the primary reason for leasing.
Tip 3: Give Yourself an Out With a Transferable Car Lease
Another thing to consider is whether your lease contract is transferable. Consider what you would do if you were to move, lose a job, or experience another unforeseen occurrence. Having the ability to transfer the lease could be the least expensive option in some scenarios.
Some websites can match you to people looking to take over car leases if you want to get out of your lease. One is SwapaLease.com. You cannot terminate your lease early without a “transferable lease” clause in your contract, so make sure to look for leases that include it.
RELATED: Car Lease Takeover: What You Need to Know
Tip 4: Know How Many Miles You Have
The amount of miles on a lease varies from lease to lease. Some options include high mileage limits. But the typical range is between 10,000 and 15,000 miles per year. A high-mileage lease might include 25,000 annual miles or more. Calculations ahead of time can help you choose the mileage cap that’s right for your driving habits.
Low-mileage leases with 8,000-mile allowances cost less, but they aren’t a good option if you spend considerable time on the road. No matter what mileage limit you choose, careful monitoring throughout the lease term will help keep you on track to avoid paying excessive mileage penalties.
Tip 5: Add Miles to Your Lease After Signing
Most companies will allow you to add miles to your lease at the beginning of the lease. It isn’t as easy after the agreement is in place. However, you should contact the leasing company to renegotiate the mileage allowance when you determine that you’ll likely exceed the limit. You’ll have to pay if the company agrees to amend the lease terms, but the additional cost will likely be less than the per-mile overage penalty due at the end of the lease.
How Much Do Miles Matter in a Car Lease?
In a nutshell, mileage limitations can be the most significant deterrent to leasing. It’s a worthy concern because the number of miles offered may not be enough for some drivers. This is especially true for people who regularly drive long distances in rural areas.
And, if returning to the office after working from home remains a concern, mileage limits should ultimately drive your decision to lease or not to lease.
Check out the Autotrader Car Lease Calculator and see how much you can afford.
Editor’s Note: This article has been updated since its initial publication.
If you happened to have made a large cap reduction (which I never recommend), thus lowering your monthly payment, taking over the kease may be beneficial to someone.,
When my lease is over. Do I pay up front for the excess miles I’ve used or is it paid in monthly payment similar to a car payment?
Thanks for reading, Eddy. Any excess mileage fees are collected when you return your leased car. You might be able to negotiate that fee if you’re leasing another vehicle when you turn in the current one.
When returning a leased car, that has $1000 over in miles how does the lease company collect
Thanks for reading, Shane. The leasing company will charge you a fee when you’ve gone over your mileage cap. If you had an auto-payment set up for your monthly lease payment, the mileage charge would likely come from that same account. However, you should contact them to negotiate a lower fee before turning in the car. Do not try to skip out of paying the charge. It’s a contractual obligation, and not paying it will cause your credit score sink, making it harder for you to get the best rates when you finance or lease your next vehicle. Also, remember that leasing companies typically waive any mileage overage charge if you buy the car at the lease end.
I am currently leasing and it was good when i WFH for two and a half years. Now that I am back, I want to turn it in early.
Isn’t yet another option to purchase more miles while you’re still in the lease?
One thing I learned is that if you go over your milage and are planning on getting another car from the same brand they will either forgive the extra miles or give a 50% discount. If I was going to go to another brand after turning it in then they will charge me all the fees they can.
I had a lease that allotted 10k miles per year on a 4yr lease. We went over 100k miles. At the time of the lease ending the car’s value was supposed to be $16k. For the overage of miles we were charged almost $20k. They then sold the vehicle at auction for a few $1,000. So on that $16k car, they made almost $25k. How can the over mileage amount exceed the original value of the vehicle?
I would have to say you paid your stupid tax. Why didn’t you just pay the $16k and buy the car?
No kidding! That’s a lot of coin to throw at a car you’re giving back
I swear this is true. I used to work at a Toyota store. We had a lady come in with a van she leased “for her brothers church” that was 2 years old with 187k on it! Her lease was a standard 3 yr 12k. Her options were:
Doug missed another option, which as another Doug I’ll provide to you. Since you’re already over the mileage try to sell the lease on a lease swapping site. Offer an incentive on the lease, and hopefully someone who doesn’t drive as much will buy it.
I have very little sympathy for people who get so ahead of their leases. You know how much you drive to work, and add a bit for pleasure, the math is easy. Either he didn’t pay attention to what he was getting into or his job changed right after the lease started. He needs to buy extra miles, they’re $.25/mile but if you do it ahead of time they can add it to the payment instead of as a lump sum at the end. I’ve never heard of anyone being so off track that wasn’t planning on buying the car at the end. It’s like signing a 2 year lease on a studio apartment when your wife is six months pregnant: you know it won’t work but it’s cheap so what the hell, then reality sets in and you’re screwed.
good thing there’s people like you in the world to keep things orderly and just for the rest of us.
Wow-after 4 years of leasing, THEN you finance the car? Somebody didn’t do their homework when they entered this lease….
Is the trip from LA to San Deigo for work? My company reimburses something close to 50 cents/miles for using a personal vehicle for business use. You could MAKE money on this!!! /s
Buying the car at the end doesn’t always work if you’re way over mileage, don’t forget if the car is supposed to come back with 36,000 miles but comes back with 56,000 it is not worth the buyout price and you can have difficulties financing it and may be stuck having to put a large down payment on it anyway.
If the instrument cluster fails and you have it replaced, then the car is considered ‘True Mileage Unknown’ and there is no way to determine the mileage on lease turn-in. Worked out great for me with a Passat TDI. It’s probably somewhat less likely that the instrument cluster will fail in a Mercedes and need to be replaced before the lease ends.
I’m glad you didn’t mentioned lease trade as a viable option. I took over a lease once as I needed a short term vehicle for an employee. Even though I personally knew the initial lessee (both of us being extremely knowledgeable about this stuff), it was a red tape nightmare. I can’t imagine going through the process with someone you didn’t know. I’ll never lease trade a car again.
Will you review the RCF?
Had this issue on a couple of leases and did option 5) Trade it in before the lease is up. You can always trade it in, no matter to who since all leases have a pay-off amount, just depends on what they have as an estimated turn-in value. If it’s a decently good resale value, sometimes you don’t get hurt too badly. Acura is very good with this. Not so good, Infiniti. There’s a reason why they lease so cheaply, they simply inflate the value at turn-in. That’s not bad if you keep it through the lease, but good luck in the middle. Just ask me.
There’s only one correct answer – https://www.autotrader.com/car-video/video-i-buried-my-1983-chrysler-lebaron-272578
some of my friends who are brand-loyal do this all the time: when negotiating their next car, the dealer offers to eliminate the mileage penalty on their previous car. it works most of the time
They bury the costs in the new car. There are several ways this is done, but the bottom line is that you are paying more for the new car than you otherwise would have if you didn’t have the mileage issue on the old car. I worked at a dealer; don’t let them ever tell you otherwise. You’re paying for the excess mileage in some way, EVERY TIME.
Ron needs to A. look into prepayment of the miles, they are usually discounted (but still will be more than .15). B. Swap the lease while it still has enough annual mileage to be useful to someone else, then buy something reliable to drive 20k miles per year.
Craigslist in southern california is lousy with lease takeover “offers” from people in exactly the same situation. I think you are going to have a hard time finding someone who wants to pay those monthly payments for a car with <5000 miles/year left. If you find the perfect person who wants that car and doesn’t drive much you might come out better, but it will be hard to find — especially if you are racking up miles while you search.