Excess mileage charges

What are they? If a vehicle does more miles than estimated at the start of the contract, the leasing company will charge for every mile above the agreed limit. This fee compensates the leasing provider for additional maintenance and depreciations costs.

What’s the cost? Charges vary considerably. It is likely to depend on the engine size and type (diesel usually costs more than petrol).

For example, 3ppm for a 1.0-litre petrol engine or 8ppm for a 2.0-litre diesel engine. Last year’s FN50 found that the average end-of-contract charge was £540.

How can you reduce mileage charges? Keep track of mileages – potentially through fuel card data, telematics data or servicing records.

If it looks like you will go over the estimated mileage speak to your leasing company about re-writing the contract.

The leasing company may charge a fee for this and there may be a restriction on the number of re-writes. Some providers offer unlimited re-writes at no cost.

What could you negotiate instead? If you are in a solus deal with your leasing provider or you lease enough vehicles from them, you could ask for a pooled mileage agreement.

This aggregates actual and contracted mileages of vehicles returned within a certain time period. Not all leasing providers do this, particularly for small fleet customers.

Also bear in mind that leasing companies will have different methods for pooled mileages.

Some will charge if you go over the contracted aggregate mileage, others will allow you to roll the excess miles forward.

If you are under the contracted aggregate mileage some will give you a refund, others will carry credit forward to the next quarter or until your next bill.

Some will have a tiered approach based on how much you have gone over or under the contracted mileage.

Also consider when you will return vehicles. If you have a large fleet you will probably return enough vehicles to do pooled mileages on a quarterly basis. A smaller fleet might be better with an annual pooling arrangement.

Vehicle Excise Duty

Peter Bonney, fleet controller at the Salvation Army, says: “Leasing companies used to take the risk of VED going up or down. Now, they budget for three years on the rate at the time you sign the contract and if it changes during the contract you need to pay the difference.”