What should I do to find out what my annual mileage is?
Basically, when you lease a car the amount you pay monthly is worked out by deciding how much the car will be worth when your contract comes to an end – this is known in the leasing business as its ‘residual value’.
Obviously, the fewer miles your lease car covers, the more its resale value will be.
Therefore, if you exceed your agreed mileage allowance it’s the funder (the owner of your lease car) who has to deal with the unpredicted depreciation cost.
This also means extra charges at the end of your contract for every mile over your agreed allowance you travel.
The easiest way to avoid going over your agreed mileage allowance and incurring those extra charges is to work out in advance what your annual mileage will be.
Please remember though, choosing a mileage allowance much higher than what you actually need will increase your monthly payments and no refund will be given to you at the end of your contract for the miles you didn’t cover – so to save you money it makes sense to calculate your annual mileage as accurately as possible.
First, if you use your lease car to travel to and from work, you need to work out how many miles on average these journeys take and multiply the answer by 20.
Secondly, work out how approximately how many miles you cover in your lease car for personal use at the weekends, such as trips to the shops, family visits etc.. and multiply your result by 52.
Lastly, roughly calculate how many long distance journeys you expect to make annually and add these miles to your work and personal results – this should provide you roughly with your annual mileage.
And don’t worry if part way through your lease term your circumstances change, as you can increase your mileage allowance, however, there’s no option to decrease your mileage mid-term, so please consider this when choosing your mileage allowance.
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