Reviewed by
Billy Lang, Director
FCA Registration No: 835008
Why mileage allowance matters more than people think
Mileage allowance is the single most under-thought decision on a van lease. People focus on the headline monthly figure and tick a default mileage box — and then either overpay every month for miles they never drive, or face a four-figure excess-mileage bill at hand-back.
The mileage figure on your contract sets two things: the monthly rental you pay every month for the term, and the pence-per-mile rate you owe on anything over the total at hand-back. Get it roughly right and the maths works. Get it badly wrong in either direction and you lose money.
How mileage feeds the monthly figure
Higher contracted mileage means more wear and faster depreciation, so the residual value at the end of term is lower — which is what funds the gap between the new price and your monthly payments. The funder books the residual figure at the start of the lease based on the mileage you commit to. The higher the mileage, the lower the residual, the higher the monthly.
As a rough order of magnitude: jumping from a 10,000-mile-per-year allowance to 20,000 typically adds somewhere between 15–25% to the monthly figure on a typical panel van, depending on the model. The exact number is in the quote.
Estimating annual mileage honestly
The best approach is the four-week sample.
- 1
Pick a representative month
Not your quietest, not your busiest — a normal trading month. If your work is genuinely seasonal, do this for a peak month and an off-peak month and average them weighted by trading days.
- 2
Log every drive for four weeks
Not just the obvious jobs. Include parts runs, the trips home for lunch, taking the van to the cash-and-carry, the morning supermarket pull on the way to a job. The rounding up and down adds 10–15% to most people's honest estimate.
- 3
Multiply by 13
Four weeks × 13 = 52 weeks. Round up, not down.
- 4
Add 10–15% contingency
For the work patterns you can't predict — a new client across the county, an unexpected fixed run, your van becoming the family lift to the airport.
- 5
Match to a standard band
Mileage bands are typically 5,000 / 8,000 / 10,000 / 12,000 / 15,000 / 20,000 / 25,000 per year. Round up to the next band rather than down. The cost of one wasted band is small. The cost of going over by 5,000 miles is not.
What excess-mileage charges actually cost
Your contract sets a pence-per-mile rate that applies to every mile over the total contracted mileage at the end of the lease. Typical rates sit between 8p and 18p per mile on vans, depending on vehicle and term. The rate is fixed when you sign — it does not adjust later — and it is not negotiable at hand-back.
The maths is simple but ugly when you get it wrong. A worked example:
A self-employed courier signs a 36-month lease at 15,000 miles per year on a medium panel van. Their excess-mileage rate is 12p per mile.
- Contracted total over the term: 15,000 × 3 = 45,000 miles
- Real annual mileage turns out to be 19,000 — they underestimated
- Actual total over the term: 19,000 × 3 = 57,000 miles
- Excess: 12,000 miles
- Bill at hand-back: 12,000 × 12p = £1,440
Had they signed at 20,000 miles per year from day one, their monthly rental would have been higher — but the total cost over the lease would almost always have been lower than paying excess-mileage charges, and they would not be facing a single chunky bill at the worst possible moment (when they need cash to start the next vehicle).
The numbers above are illustrative — your actual rate is on your specific quote, and varies by vehicle and term.
When higher mileage is genuinely the right call
- Owner-driver couriers almost always need 20,000+ miles per year. The economics of running below that figure rarely make sense.
- Mobile tradespeople covering a wide patch — typically 12,000–18,000 per year, depending on whether your jobs cluster locally or stretch across two or three counties.
- Anyone who's blown through a previous lease's mileage. If your last van went over, your next one almost certainly will too. Build the contingency in up front.
- Growing businesses. If turnover is climbing, mileage usually climbs with it. Don't lock in last year's pattern for the next three years.
Rule of thumb
Round up, not down
The cost of one wasted mileage band is small — a few pounds a month at most. The cost of going over by 5,000 miles is hundreds. The asymmetry is enormous, and it always points the same way.
If you're between two bands, take the higher one.
Related
Use case
Van leasing for couriers
High-mileage owner-driver work — and the mileage maths.
Use case
Van leasing for tradespeople
Trade-by-trade vehicle guidance and mileage profiles.
Cost guide
Van cost guide for self-employed
What changes the price most — and a worked monthly breakdown.
Explainer
Initial rental: 1.5 vs 3 months
The companion explainer on the up-front payment structure.
Frequently asked questions
What happens if I go over my mileage allowance?
You pay an excess-mileage charge for every mile over the contracted total at the end of the lease. The pence-per-mile rate is set in your agreement and is a fixed cost — there is no negotiation at hand-back. Going 5,000 miles over a typical excess rate of 10p per mile is £500. The same overrun at 15p per mile is £750. Always check the rate on your specific quote.
Can I increase my mileage allowance mid-lease?
In many cases yes — you can apply to amend the contracted mileage during the term, and the monthly rental adjusts from that point. Doing it mid-term is almost always cheaper than paying excess-mileage charges at hand-back. If your work pattern changes, ring us early rather than waiting for the bill.
Do I get money back if I'm under my mileage?
No. Under-mileage does not normally generate a refund. Pricing is built around the full contracted figure, so undershooting is a sunk cost. The lesson: estimate honestly, not optimistically — but do not deliberately overshoot the figure either.
Is it cheaper to lease two vans on lower mileage or one on higher mileage?
Different question, different maths. For a single owner-driver, one higher-mileage van is almost always cheaper. For a small team where vehicles are shared, two lower-mileage vans may work out better — and gives you redundancy. Tell us the working pattern and we will quote both ways.
How do I estimate annual mileage if my work varies week to week?
Take a representative four-week stretch — including a busy patch — and multiply by 13. Add 10–15% contingency for client-meeting trips, parts runs, and the times you take the van home. For seasonal trades, weight the busy months heavier. Be honest: under-estimating is the single most common cause of bill shock at hand-back.
Does mileage allowance affect what soft-search outcome I get?
Mileage choice does not change the soft credit check itself — that runs against your identity, address, fraud-prevention factors, and general suitability via Creditsafe. It does change the quoted monthly rental: higher mileage allowance means a higher monthly figure, because the vehicle depreciates faster.
Excess-mileage rates and mileage bands vary by vehicle and term.
Figures on this page are illustrative. Your specific quote will show the contracted mileage, the pence-per-mile excess rate, and the monthly rental for your chosen vehicle. All quotes subject to status. First Flexi Lease is a trading name of Oak First Investments Ltd. FCA Registration No: 835008. Authorised and regulated by the Financial Conduct Authority.
Quote both bands and decide
Not sure whether you sit at 12,000 or 15,000 miles per year? We'll quote both. The difference in monthly rental is usually smaller than people expect — and the peace of mind is worth it.
