What to Do When You Drove More Miles Than Allowed in Your Lease Agreement?
If you drove more miles than allowed in your car lease agreement, you must pay the per-mile overage charge as specified in your contract.
The typical charges for each mile in excess of the maximum contracted mileage typically ranges between 15 and 25 cents per mile, depending on your leasing company. If you have far exceeded the mileage restriction, it may be more viable to complete a lease buyout than pay the mileage penalty in full.
Reasons for Mileage Charges
Leasing companies must assess overage penalties when you drive more than the maximum mileage defined in your lease agreement because lease payments are calculated using a residual value.
The residual value is the projected value of the vehicle at the end of the lease, after the vehicle is driven a set maximum number of miles. If this maximum is exceed, the residual value of the vehicle decreases.
In order to hold lessees liable for the decreased value, mileage charges are assessed.
Handling the Charges
Upon returning the leased vehicle to a dealership, you will receive a lease end statement from the leasing company. It may take a few weeks for the statement to arrive after you terminate the lease.
Once you have returned the vehicle to the dealership and you receive a final bill, the charges are final. You must pay the excess mileage fee to the leasing company in a timely manner. Occasionally, a leasing company may let you go on a payment plan if the amount owed is extreme.
Avoiding the Charges
If you have driven well over the allotted mileage for your lease, you may want to consider a lease buyout to avoid the charges. If you like your leased vehicle and can imagine keeping it for years to come, the buyout lets you keep the vehicle without the mileage penalty.
In order to buy the vehicle out, you must pay the residual value as stated on your contract. You may also take out a loan to cover the residual value, provided you meet the credit requirements of the finance company.
A Warning for Non-Payment
If you have been charged for excess mileage put on your leased vehicle and you fail to pay the balance to the leasing company in a timely manner, the lessor could sell your debt to a collection agency, who will report the non-payment on your credit report.
In addition to the harassing phone calls, this collection account may keep you from getting another car loan or lease, depending on the total amount placed in collection and the overall strength of your credit file.
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