What does annual mileage mean, and why is it important?
Annual mileage is one of the key parameters in car leasing to determine the general leasing contract terms and leasing costs.
When leasing a car, the contract includes a specified mileage limit, expressed in kilometres per year. This limit reflects the expected usage of the vehicle during the leasing contract period. So, if a 4-year leasing contract includes 15’000 annual kilometres, then you can travel a total of 60’000km during your 4-year contract.
Why is the mileage important?
The mileage is one part of determining the residual value. With every travelled kilometre, the car suffers wear and tear and as a result depreciates in value. By fixing the mileage at the beginning of the leasing contract, it is possible to calculate the residual value.
Exceeding the kilometre limit can result in additional charges at the end of the lease, as higher mileage typically leads to more wear and tear, and consequently, a lower resale value for the vehicle.
It's important to estimate your annual driving distance accurately when entering a lease to avoid unexpected costs. As a rule of thumb, you can expect to drive around 15’000km a year if you drive to work daily. If you just need your car on weekends, 10’000km may be enough.