Estimate genuine annual use
Start with commuting, school runs, regular family travel and predictable longer journeys. Review previous MOT or service records where available rather than relying on memory.
Add a reasonable margin for lifestyle changes. A contract can last several years, and an allowance that is too low may create a sizeable return charge.
How excess mileage is charged
The finance agreement states a pence-per-mile rate. At return, mileage above the total contractual allowance is normally multiplied by that rate.
Some agreements use different rates above certain thresholds. The lender quotation and agreement provide the binding calculation, not the general examples on a website.
Lower mileage is not always cheaper overall
Reducing annual mileage can reduce the monthly rental, but the saving may be outweighed by excess-mileage charges if your actual use is higher.
Compare realistic profiles rather than selecting the smallest allowance solely to achieve a target monthly figure.
Monitor mileage during the lease
Check your mileage every few months and compare it with the elapsed contract allowance. Contact the finance provider early if usage changes materially.
An amendment may be possible with some providers, but it is not guaranteed and may change the rental.