Plain-English guide
Car Finance Mileage Limits Explained
How mileage limits work on PCP and leasing, what excess-mileage charges cost, and how to avoid them.
A mileage limit is the maximum annual miles you can drive on PCP or a lease before excess-mileage charges apply — usually 8,000 to 12,000 miles a year. Go over it and you pay a few pence per mile when you hand the car back.
Here's how mileage limits work, what the charges cost, why HP has none, and how to set a limit that fits how you drive.
How do car finance mileage limits work?
A mileage limit caps your annual miles on PCP and leasing, because the car's future value depends on how far it's driven. Stay under it and there's nothing to pay; go over and you're charged per mile.
You agree an annual mileage at the start — say 10,000 miles — and the limit is that figure times the number of years. The lender uses it to set the car's predicted end value (the GMFV on a PCP). More miles mean a lower value, which is why over-driving costs you.
What do excess-mileage charges cost?
Excess-mileage charges are a per-mile fee for every mile over your limit, typically a few pence to around 20p per mile. They're calculated when you hand the car back.
The rate varies by car and lender, so check your agreement for the exact pence-per-mile figure before you sign.
Worked example
Which agreements have mileage limits?
PCP and leasing have mileage limits; HP and a personal loan do not. The limit only applies when the car's end value matters to the lender.
If you drive a lot or can't predict your mileage, HP or a loan avoids the charge entirely.
- PCP: has a limit, because the balloon (GMFV) depends on the car's end value.
- Leasing (PCH): has a limit, because you hand the car back and its value matters.
- HP: no limit, because you finance and own the whole car.
- Personal loan: no limit, because you own the car outright from day one.
How to avoid excess-mileage charges
You avoid excess-mileage charges by setting a realistic limit, tracking your miles, and adjusting early if you're heading over. Honesty up front beats a bill at the end.
Estimate your true annual mileage from past years, then set the limit a little above it for headroom. Some lenders let you buy extra miles mid-term, which is usually cheaper than the excess rate. If your mileage is genuinely unpredictable, an agreement with no limit removes the risk altogether. Compare the options on the PCP vs HP guide.
Work out your real cost
Factor the likely mileage charge into the true cost before you choose a limit. A low monthly with a big mileage bill isn't a cheap deal.
Work out the headline numbers on the PCP calculator, then add your expected excess-mileage charge to see the real total. For a deal with no mileage worry at all, run the figures on the HP calculator.
Frequently asked
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