When a leased vehicle exceeds the mileage stipulated in the leasing agreement, financial penalties are typically incurred. These penalties, often referred to as overage fees, are assessed per mile driven beyond the agreed-upon limit. For instance, if a lease allows for 10,000 miles annually and the lessee drives 12,000 miles in a year, they would be subject to overage charges for the extra 2,000 miles.
Adhering to the mileage terms of a lease agreement is crucial for maintaining cost-effectiveness. Exceeding the mileage limit can significantly increase the overall cost of the lease, negating some of the initial financial advantages. Lease agreements include mileage restrictions to account for the vehicle’s depreciation, which is directly correlated with the number of miles driven. Higher mileage translates to greater depreciation and, consequently, higher costs for the leasing company.
