What is Excess Mileage Pooling?
They look at the contractual mileage you signed up for and then look at how many miles you have actually completed over the term of the contract. For example if you take out a contract hire agreement on say 36 months, 30,000 miles in total i.e. 10,000 miles per year and you send the car back with 35,000 miles on the clock, your excess mileage liability will be 5,000 miles. The leasing company multiplies the excess 5,000 miles by the pence per mile rate charge. If this was 5 pence per excess mile, your excess mileage charge would be 5000 x 0.05 = £250.00
The reason why the vehicle leasing company charges you excess mileage is to compensate them for any loss in the re-sale value of the vehicle due to it returning with a higher mileage than they thought. If you have also opted for a maintenance contract hire arrangement they will also be trying to compensate for any extra costs they may have incurred on maintaining the vehicle. This is why maintenance contract hire may have a higher excess mileage pence per mile rate than non-maintenance contract hire.
What is excess mileage pooling?
If you run a fleet of vehicles you may use excess mileage pooling to offset any debits against credits of contractual mileage. This is an easy way to manage your excess mileage liability, however there are a few factors to consider before using this process.
Things to consider
- Does the vehicle leasing company offer an excess mileage pooling arrangement?
- If they do what are the periods of billing? If it is say every three months they may not carry forward any credits into the next billing period.
- If you use more than one vehicle leasing company then excess mileage pooling across leasing companies will not be available.
In summary vehicles that return to the vehicle leasing company in the same billing period may be aggregated to offset the credits against the debits but don't rely on this. There may be restrictions on this facility, especially if you have a smaller fleet i.e. they may not offer excess mileage pooling for a smaller fleet and you will lose your credits.
If you have a vehicle in your fleet and it looks likely to over-perform, or even under-perform the contractual mileage, you can amend your contract. Just ask your leasing supplier for a revised quote and then see if it makes commercial sense to pay the extra rental per month, rather than the final excess mileage bill. If you are revising your annual contractual mileage downwards then your rental should go down as well.
Contract hire is an excellent way to budget your fleet costs, especially if your annual mileage is pretty predictable. We have shown a selection of some of the contract hire leasing special offers on the site, on Audi contract hire and Volkswagen contract hire to give you an idea of the cost of the monthly rentals.
If you would like further information then just fill out the Contact form and one of our car finance partners will get in touch. They can provide you with a detailed quotation which will also show you the excess pence per mile rate as well.
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