At the start of the contract, the predicted annual mileage is calculated and is a fundamental part of the PCP agreement. It contributes to the resale price (or Guaranteed Future Value) of the vehicle. If this estimated mileage is exceeded a charge will be due on every mile over the agreed amount.
The charge is calculated based on the extra depreciation of the vehicle caused by the excess mileage. If an optional maintenance package is included then the charge will also include an element to account for extra servicing (e.g. tyres and exhausts) that will have been required over and above the expected maintenance budget.