Car Leasing – Be Wary Of Unlimited Mileage Deals

Car Leasing – Be Wary Of Unlimited Mileage Deals

You may have come across one of the many van or car leasing deals offering ‘unlimited mileage’. Sounds great, but how do they work and are they as good as they sound?

Vehicle leasing expert Jane Ramsey explains “These deals do sound good on the face of it, but as with most things in life, if it sounds too good to be true, it usually is and there is a catch!”

One of the finance packages used when leasing a vehicle is called Finance Lease. This is where a business leases a vehicle over a set period and at the end of the lease there is a balloon payment, that the customer is responsible for.

‘Unlimited Mileage’ deals are essentially Finance Lease and unlike other types of finance, there is no direct excess mileage charge. This does not mean that the mileage is ‘unlimited’ though as there is a residual balloon figure which is based on a set mileage.

For example, if the Finance Lease is set up on the standard 10,000 miles per year when you actually do 30,000 miles per year, you can guess that a vehicle with 90,000 miles on the clock will be worth substantially less than one with just 30,000 on the clock.

Herein lies the problem. If you have been sold an ‘unlimited mileage’ lease and you do more than the mileage stated on the contract, you can pretty much guarantee that the vehicle will not be worth the balloon figure at the end of the lease.

This means that you have to pay the difference, so in effect you are paying for the additional mileage anyway.

Another issue

The second issue, which is not always pointed out, is that the customer is also responsible for selling the vehicle at the end of the lease.

Unlike Contract Hire where you just hand the vehicle back, you have to find a buyer for the vehicle and pay the finance company the balloon figure.

So where does Finance Lease work?

We would recommend Finance Lease to builders or trades people where vans may have a hard life and it would not be worthwhile paying the damage recharge if it were on Contract Hire.

By: Charlotte Cavanagh

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Charlotte Cavanagh is a vehicle leasing specialist. For more useful tips and information on private car leasing and company car leasing visit

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