Lease Mileage Explained: Allowances and Overage Fees

By the Tool Goodie Team · Updated July 6, 2026 · 4 min read

A lease mileage allowance is the yearly limit of kilometres you can drive — usually 16,000 to 24,000 km — set by the dealer. Drive past it and you pay a per-kilometre overage fee (about 10–25¢/km) at the end of the lease. Understanding your allowance up front is the difference between a smooth lease-end and a surprise bill. Here's how it works.

Key takeaways

Allowances are annual — commonly 16,000, 20,000, or 24,000 km/year.
20,000 km/year ≈ 1,667 km/month ≈ 55 km/day.
Overage fees run about 10–25¢ per km at lease end.
Check your numbers with the lease mileage calculator.

How allowances work

When you lease, the dealer sets a yearly kilometre limit. The residual value of the car — and therefore your payment — is based partly on that number, which is why a higher allowance costs a little more each month. Your total allowance is simply the annual figure times the lease length: a 20,000 km/year allowance on a 3-year lease gives you 60,000 km total.

Turn the allowance into a daily budget

The easiest way to stay under is to think per day, not per year:

Per month = annual allowance ÷ 12 · Per day = annual allowance ÷ 365

So 20,000 km/year is about 1,667 km a month or 55 km a day. If your commute alone eats most of that, a standard allowance may be too tight.

What overage actually costs

If your projected driving exceeds the total allowance, the overage is charged per kilometre at the end:

Overage cost = (kilometres over allowance) × per-km rate

Drive 5,000 km over at 15¢/km and that's a $750 bill when you return the car. At 25¢/km it's $1,250. It adds up fast for high-mileage drivers.

See if you'll go over: the free Lease Mileage Calculator turns your allowance and driving habits into a monthly and daily budget, then shows whether you'll exceed the limit and exactly what the overage would cost.

How to avoid overage fees

Buy kilometres up front. Pre-purchased km are usually cheaper than the end-of-lease overage rate.
Choose a higher allowance if you know you drive a lot — the small monthly bump often beats a big final bill.
Consider buying instead. Loans have no mileage penalty — weigh it with car loan vs lease and the car lease calculator.

Frequently asked questions

How many kilometres can you drive on a lease?

Lease allowances are usually 16,000 to 24,000 km per year, set by the dealer. A 20,000 km per year allowance works out to about 1,667 km per month or roughly 55 km per day.

What happens if you go over the lease mileage?

You pay a per-kilometre overage fee at the end of the lease, typically 10 to 25 cents per km. Going 5,000 km over at 15 cents per km would cost $750 at lease end.

Should you buy extra kilometres up front?

If you expect to exceed your allowance, buying extra kilometres at signing is usually cheaper than paying the overage rate at the end. Dealers discount pre-purchased miles compared with end-of-lease penalties.

Disclaimer: This article is for general education only. Allowances, overage rates and rounding rules vary by contract, and some leases measure in miles. Confirm the exact terms with your dealer.