Everything’s rolling along great in your leased car, but then one day you look down at the odometer and something doesn’t seem right… You realize that at the rate you’re driving, you’re going to go over the mileage stated in your lease contract. Or maybe you’ve gone over it already!

Don’t panic, this is a fairly common situation. Before you try running the car in reverse to turn back the meter, learn here about allowed mileage and what happens if you go over miles on a car lease.

Mileage allotments: why do car companies limit how much I can drive?

Before we go further, let’s understand why there are mileage limitations on car leases. This concept can seem very frustrating to many drivers, and the overage fees seem like punishment.

That’s actually not what’s going on. Remember that cars depreciate or lose value over time, especially as they pick up more miles.

When you sign on for a lease, the rate of your monthly payments is determined by the vehicle’s residual value, or how much it’s expected to be worth at the end of the lease period. You are essentially paying for the car’s loss of value over the time of your lease (and with the wear and tear of your driving).

After all, at the end of the lease you hand over the keys to a perfectly good three-year-old car, which the company intends to resell.

Extra miles means lower resale value, so these overage fees are just compensating the company for that additional loss in value.

Overage fees: how much do I have to pay more extra miles?

Overage fees go by the mile, but the exact rate varies depending on the brand, model and trim level of your car, as well as the bank that financed the lease. They can range from $0.15-0.50/mile, though most fall between $0.20 and $0.30.

The rate has a lot to do with the depreciation rate, but different banks may set slightly different rates for the same car. This is something it’s best to check with the leasing company and your bank before making a decision on how to move forward.

What to do if you’re going over during the lease period

Let’s say you’re in the better situation and you’ve noticed that you’re surpassing your allotted miles in the middle of the lease period, but you’re not over the limit yet.

The most simple solution is, of course, to drive less! (I said simple, not magic.)

Take an honest look at your driving habits and see if there’s anywhere you can cut down.

To reduce driving without giving up the places you go, you can try to arrange a carpool. It’s also a great way to get to know your coworkers! Or, use a bicycle or public transportation. Yes, maybe this is what you leased a car to avoid, but at least you can say goodbye to sitting in traffic.

If you’re ok with your daily commute but a long road trip will push you over the limit, consider renting a car for the voyage.

Another option, if you’re near the end of your lease and not quite over the allowed mileage yet, is to check if your car company offers a pull-ahead program.

These programs allow you to end your lease a few months early and upgrade to a new vehicle from the same brand. It can be a way for you to get into a new car and avoid tipping over the mileage limit at the same time.

What if I’m already over miles?

But what if you only notice you’re going over miles when you’ve already gone over miles? Or if there’s no way you’ll end the lease without going over? It’s too late to fix the situation but you can minimize the damage.

First, cut back on driving as much as you can, so you stop digging yourself deeper.

One possibility is to plan on taking the buy-out option at the end of your lease period. If you don’t want to own a car, then I wouldn’t tell you to buy one just to avoid a few hundred dollars in overage fees, but if you’re already considering it this might be an added incentive.

If you don’t want to buy the car, then at this point you’ll have to just pay the fees. But now that you’ve been through this once, you can know and plan better for the future.

How to avoid taking your next car lease over miles

Before you sign another a car lease contract, pay careful attention to the mileage limit. These are usually given as an annual allotment.

To see how this squares off with your driving needs, do a calculation of your average miles per week, rounding up to be on the safe side. Multiply this by 52 for a yearly sum, plus any anticipated long trips.

So what if you need more miles than the contract allows? You can either give up on leasing and buy a car, or take a useful but little-know second option: the high-mileage lease.

This is simply a lease where the contract allows for more driving than is generally given. You will pay more, but the rate per extra mile will be less than the fees you would pay at the end of the lease.

Conclusion

I hope this article gives you a plan of action. The good news is, life goes on if you go over miles. The worst-case scenario is paying a few hundred bucks and knowing better for next time.

Working with an expert in the field when you sign a lease can also help avoid these tight situations. At Capital Motor Cars, for example, we make sure that all our clients are clear about their needs and the terms of the lease before they sign. This can prevent some nasty surprises.