Mileage allowance: is it worth paying extra for a higher allowance?
But what happens if you think you might need to drive more miles than your allowance? Is it worth paying extra for a higher mileage allowance when you lease a car?
The answer to this question depends on your individual circumstances and driving habits. Here are some factors to consider.
Your Typical Driving Habits
Firstly, it's important to consider how many miles you typically drive in a year. If you are someone who drives very little and only uses your car for short trips or occasional outings, you may not need a high mileage allowance. For example, if you only drive about 7,000 miles a year, you could opt for a lease with a 10,000-mile allowance and still have a buffer.
On the other hand, if you are someone who commutes long distances for work or enjoys taking road trips, you may need a higher mileage allowance. If you regularly drive over your allowance, even by just a few hundred miles, the excess mileage charges can add up quickly. In that case, it may make more sense to pay extra for a higher mileage allowance upfront.
The Cost of Excess Mileage Charges
When you lease a car, the excess mileage charge is a fee that you pay if you go over your allotted mileage allowance. The amount you have to pay per excess mile may vary depending on your lease agreement. It's important to check this before you sign on the dotted line, as it can vary from one leasing company to another.
Excess mileage charges can be quite costly, often ranging from 10 to 25 cents per mile. This means that if your lease contract allows only 10,000 miles per year and you drive 13,000 miles, you'll end up owing between $900 and $1,500 in excess mileage fees. These charges can add up quickly over time, especially if you consistently exceed your mileage allowance.
The Extra Cost of a Higher Mileage Allowance
Now, let's take a look at how much it would cost to increase your mileage allowance. Again, this will depend on your leasing company and the specific terms of your lease. Typically, you'll be offered different tiers of mileage allowances, with higher levels costing more.
For example, you might be offered a lease with a 10,000-mile allowance for $250 per month or a lease with a 12,000-mile allowance for $275 per month. If you know that you're likely to go over the 10,000 miles per year, it might be worth paying extra for the higher mileage allowance.
However, it's important to consider whether the extra cost is worth it. In most cases, the extra fee for a higher mileage allowance will be spread out over the length of your lease, which could be anywhere from 24 to 48 months. So, if you're paying an extra $25 per month for a 2-year lease, that adds up to an extra $600 over the life of the lease.
If you're someone who drives a lot and frequently exceeds your mileage allowance, that extra cost may be worth it to avoid the excess mileage charges. If you only occasionally exceed your allowance, it may be more cost-effective to pay the excess mileage fees as they come up.
Other Considerations
When deciding whether to pay extra for a higher mileage allowance, there are a few other factors to consider. For example, you should think about how much you plan to use your leased car over its lifetime. If you're only going to be leasing the car for a year or two, then it may be easier to estimate your mileage needs. However, if you're leasing a car for three or more years, it can be more difficult to predict your annual mileage accurately.
You should also think about any potential changes to your driving habits or lifestyle over the course of the lease. For example, if you're planning on starting a new job that requires a longer commute, you may end up driving more miles than you initially anticipated.
Finally, it's important to remember that leasing a car is a financial decision and there are other costs associated beyond just the monthly payment and excess mileage charges. For example, you'll be responsible for maintaining the car, buying insurance, and paying taxes and fees. Be sure to factor all of these costs into your decision.
In conclusion, when it comes to deciding whether to pay extra for a higher mileage allowance when leasing a car, it ultimately comes down to your individual circumstances. If you're someone who drives a lot or frequently exceeds your mileage allowance, it may be worth the extra cost to avoid excess mileage fees. However, if you only occasionally exceed your mileage allowance, it may be more cost-effective to pay the fees as they arise. Whatever you decide, it's important to make an informed decision based on your driving habits, budget, and lease agreement terms.