Example: Excess Mileage Charge

Assume that the residual value in an open-end lease is $12,000, the realized value is $11,000, the base monthly payment is $250, and the excess mileage charge is $150. The end-of-term deficiency is $1000. However, under the three-payment rule, the maximum charge should not exceed $750 plus the $150 excess mileage charge, or $900 (assuming there is no excessive wear-and-tear charge). You are not liable for the full $1000 residual loss unless the lessor can prove that the residual value or amount was reasonable when it was set.

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