What are excess mileage charges, and how much could you pay?
Every Personal Contract Hire (PCH) or business contract hire agreement sets a maximum annual mileage when you sign up. Go over it, and you'll be charged a fixed pence-per-mile rate for every extra mile — but not year by year. Most lease providers only add up your total mileage at the very end of the contract, so a low-mileage first year can offset a higher-mileage second year, and vice versa.
Rates vary by funder and by vehicle, typically running from around 3p to 30p per mile, with most mainstream cars and vans falling somewhere between 7p and 11p per mile. That means going 2,000 miles over your allowance on a typical contract could add anywhere from £140 to £220 to your final bill — not enormous, but not something you want to discover unexpectedly either. The exact rate is always printed in your agreement, so it's worth checking it early rather than at collection.
The charge exists because mileage affects the car's residual value — the price the leasing company expects to sell it for once it comes back. More miles generally means more wear and a lower resale price, and the excess mileage charge is designed to cover that gap.
Fair wear and tear: what's covered when you hand the car back
Mileage isn't the only thing inspected when a lease car goes back. The industry works to the BVRLA Fair Wear and Tear Guide, which sets out what counts as normal, everyday use — light scuffs, small stone chips, minor scratches picked up from ordinary UK roads — and what doesn't. Damage from neglect, accidents, or missing equipment, such as cracked windscreens, larger dents, or lost keys, falls outside fair wear and tear and can mean a repair charge on top of anything mileage-related.
The guide recommends starting your preparations 10 to 12 weeks before the car is due back. That gives you time to book in any minor repairs — a scuffed alloy or a stone chip in the windscreen, for example — often far more cheaply through an independent repairer than through the leasing company's own end-of-contract charge.
Why it's worth checking your mileage now, not at collection
New car registrations have been on a strong run this year: the SMMT recorded 94,236 new car registrations in August 2026, up 13.7% on the same month last year and the strongest August since the twice-yearly plate change was introduced. Fleet registrations made up 57.2% of the market and private demand rose 19% year-on-year, which tells us plenty of drivers are actively taking out new agreements right now — and plenty of existing lease customers are approaching the end of theirs at the same time.
If your contract is due to end in the next few months, checking your actual mileage against your contracted allowance now, rather than waiting for the return inspection, gives you real options. If you're on track to go over, most funders will consider a mileage amendment partway through the contract, and this is almost always cheaper than paying the full excess charge at the end. Leaving it until the final weeks makes negotiation far harder.
How to avoid excess mileage charges altogether
A few simple habits make a real difference. Be realistic when you agree your annual mileage at the start of the contract — it's tempting to underestimate to keep monthly payments lower, but the saving is rarely worth the risk of a large bill later. Check your mileage against the contracted allowance every few months, not just towards the end. And if your circumstances change — a new job with a longer commute, more family travel, a role that's gone hybrid and cut your driving right down — contact your leasing company early to discuss adjusting the agreement.
This applies whatever's on your driveway. Whether you've gone for a petrol supermini, a diesel estate for motorway miles, a hybrid, or a fully electric car, the mileage and fair wear and tear rules work the same way, and the maths is worth doing for any fuel type. For higher-mileage drivers, it's often more cost-effective to agree a realistic mileage from day one, even if it nudges the monthly payment up slightly, than to risk a lump-sum charge at handback.
Whether you're a few months from returning your current lease or thinking ahead to your next one, getting the mileage and condition right from the outset makes the whole process far more predictable. If you'd like help working out the right annual mileage for your next agreement, or want a hand understanding your current contract's charges, the team at ABC Leasing Hub is happy to talk it through.