Choosing to start your first lease is one of the cheapest ways to drive a brand new car. The initial payment is far lower than paying the deposit on a new car purchase. The monthly repayments are also lower, and when the lease term ends you won't be charged a penny more unless you've exceeded your mileage allowance. But, despite being the cheaper option, driving a lease car still comes with a price tag.
"Do I pay VAT on excess mileage fees from my lease vehicle?" this is one of our frequently asked questions. If you do end up going over the mileage agreement on your leased vehicle then the short answer is yes, you do pay VAT on excess mileage on a lease car. Lease cars have a mileage allowance to cover depreciation of the vehicle during the lease. Vehicles lose value the more mileage they do and to cover the estimated loss on the vehicle the lease company base their fees on the expected depreciation. The amount you pay on your lease will vary depending on the amount of mileage you are expecting to do. Your estimation at the start of your lease should be as accurate as possible. Factoring in planned trips and long distances if you can. Of course, sometimes circumstances change during the course of your lease which results in the need to do more miles. Perhaps you decide to move home and the property is further away from your place of work leading to an increase in commuter mileage daily. Don’t panic, there are options available to you which we’ll go through in this article.
So, you’ve gone over the mileage you agreed on your lease car and you’re not sure what happens next.Firstly, don’t panic. While it may seem like the end of the world, it’s actually a fairly common situation.
Finance and leasing companies are pretty used to getting cars or vans returned with more miles on the clock than agreed in the contract. In fact, unless you’ve gone completely overboard and done double your annual mileage, they’ll barely bat an eyelid.
We go through this process a lot at OSV, which is why we’re going to talk you through exactly what happens when you go over the agreed mileage on your lease. So relax, we’ve got this...
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