A lease agreement for a vehicle includes a predetermined annual mileage allowance. Exceeding this limit typically results in additional charges at the end of the lease term. For example, a common allowance is 12,000 miles per year for a three-year lease, totaling 36,000 miles. Driving beyond this would incur excess mileage fees, often calculated on a per-mile basis.
Establishing a realistic mileage limit is crucial for both lessees and lessors. It allows drivers to accurately estimate the total cost of leasing and avoid unexpected expenses. Historically, mileage limits were less prevalent, but as leasing became more popular, they emerged as a standard component of lease agreements to manage vehicle depreciation and resale value. This practice benefits leasing companies by mitigating potential losses and helps keep leasing costs competitive for consumers.
