Excess Mileage Calculator

What Is Excess Mileage?

Excess mileage is the number of miles you drive above your agreed contract allowance.

Most lease and finance agreements set a yearly mileage limit. If you exceed it, you pay a charge for every extra mile.

This usually applies to:

• Personal Contract Purchase (PCP)
• Personal Contract Hire (PCH)
• Business Contract Hire (BCH)

It usually does not apply to:

• Hire Purchase (HP)
• Personal loans (cash purchase)

With HP or a loan, you own the vehicle at the end. There is normally no mileage cap.

Why Mileage Limits Exist

Mileage affects the car’s resale value.

Higher mileage:

• Reduces market value
• Increases wear and tear
• Raises risk for the finance company

So finance providers build mileage limits into contracts to control depreciation.

How Excess Mileage Charges Are Calculated

The standard formula is simple:

(Actual Miles Driven – Allowed Miles) × Rate Per Mile + VAT

Let’s break that down.

Step 1: Calculate Total Allowed Mileage

If your contract includes:

• 10,000 miles per year
• 3-year term (36 months)

Then:

10,000 × 3 = 30,000 miles total allowance

Step 2: Work Out Your Net Mileage

Net mileage means:

Current odometer reading – Delivery mileage

Example:

• Current mileage: 45,000 miles
• Delivery mileage: 10 miles

Net mileage = 44,990 miles

Step 3: Find the Excess Miles

If your total allowance is 30,000 miles:

44,990 – 30,000 = 14,990 excess miles

Step 4: Apply the Excess Mileage Rate

Rates are usually shown in pence per mile.

Typical UK rates:

• Economy car: 6p per mile
• Mid-range car: 10p per mile
• Executive car: 15p per mile
• Luxury/performance: 25–30p per mile

If your rate is 14.9p per mile:

14,990 × £0.149 = £2,233.51

Step 5: Add VAT

Most UK finance companies add 20% VAT.

£2,233.51 × 20% = £446.70 VAT

Total charge = £2,680.21

That is how quickly excess mileage can become expensive.

What an Excess Mileage Calculator Does

An online excess mileage calculator automates all of this.

You simply enter:

• Finance agreement type
• Contract duration (months)
• Annual mileage allowance
• Current vehicle mileage
• Delivery mileage
• Excess mileage rate (pence per mile)
• VAT rate

The calculator then:

• Calculates total allowance
• Identifies excess miles
• Applies the rate
• Adds VAT
• Shows the final estimated charge

If you are within your limit, it confirms there is no excess charge.

Contract Types Explained

Here is how mileage rules typically apply.

PCP (Personal Contract Purchase)

You pay monthly instalments and have the option to buy at the end.

Mileage limits apply.
Excess mileage charges apply if you return the vehicle.

PCH (Personal Contract Hire)

This is a long-term rental.

You return the vehicle at the end.
Mileage limits strictly apply.

BCH (Business Contract Hire)

Similar to PCH, but for businesses.
Mileage caps and excess charges apply.

HP (Hire Purchase)

You pay in instalments and own the car at the end.

There is usually no excess mileage charge because ownership transfers to you.

Personal Loan (Cash Purchase)

You buy the vehicle using borrowed funds.

No mileage limits apply.

Why VAT Matters

In the UK, excess mileage charges usually exclude VAT in the contract wording.

So if your agreement says 15p per mile, the actual cost may be:

15p + 20% VAT = 18p per mile total

Always check your finance documents.

Mileage Projection: A Smart Feature

Some advanced calculators include a contract start date option.

This allows you to:

• See how many months have passed
• Compare expected mileage vs actual mileage
• Project total mileage at contract end

For example:

If you are 12 months into a 36-month contract and already over your expected mileage, you can adjust early.

This can save thousands.

When Excess Mileage Rates Increase

Some contracts increase the rate after a certain threshold.

Example:

• First 5,000 excess miles at 10p
• After that, 15p per mile

If you are over 5,000 excess miles, check your agreement carefully.

How to Avoid Excess Mileage Charges

You have options.

1. Adjust Your Driving Early

If projections show you are going over:

• Reduce long trips
• Use another vehicle
• Consider public transport

Small changes add up.

2. Buy Additional Miles in Advance

Many providers allow you to purchase extra mileage before the contract ends.

This is often cheaper than paying excess charges later.

3. Part-Exchange the Vehicle

If you are on PCP and have positive equity, you may avoid paying excess mileage directly.

4. Choose a Realistic Mileage at the Start

Many drivers underestimate annual mileage.

Check:

• Daily commute distance
• School runs
• Weekend trips
• Holidays

Be realistic. A slightly higher monthly payment is often cheaper than a large final bill.

Common Questions About Excess Mileage

Is excess mileage charged monthly?

No. It is usually charged when the vehicle is returned.

Can excess mileage be negotiated?

Sometimes. It depends on the provider and condition of the vehicle.

Do I pay excess mileage if I buy the car?

With PCP, if you buy the vehicle, excess mileage charges usually do not apply.

Does mileage affect part-exchange value?

Yes. Higher mileage reduces resale value, which can affect equity.

Why You Should Use an Excess Mileage Calculator

An excess mileage calculator gives you:

• Clear cost estimates
• Better budgeting control
• Early warning signs
• Stronger negotiating position

It removes guesswork.

Instead of waiting until the end of your contract and hoping for the best, you can check your position today.