Buy existing Scirocco currently on PCP or new deal ????

[JREwing]

tbc said:

unless you wipe your backside with £100 notes these days

I just cannot understand why any would buy a new car over a pre reg or year old and save yourself 25%

and it's a VW so reliability is hardly an issue

2011 Scirocco GT for £15-16k

There are plenty of Volkswagen horror stories out there.....

[Ari]

JREwing said:

There are plenty of Volkswagen horror stories out there.....

Pick any make you like and there are plenty of horror stories out there, it's the joy of the Internet.

[Ari]

Deva Link said:

Ari said:

Everyone I know that has a "car allowance" does this. No one seems to stop and think "hang on, if I'm a bit cleverer with how I pay for my car, I'll have more left to save/spend on coke and hookers/have a holiday/buy a bigger house with", as they would if they were spending their own money. Even though it is their own money! They get to keep whatever they don't spend.

Well, I know literally hundreds of people on car allowances - in my last big corporation job as part of the management team I was involved in introducing a car allowance as an alternative to company cars.

By a million miles the main issue the top management had with the scheme was people down-sizing and putting the cash in their back pockets. Sure, there were one or two who went mad and bought something way above what they would have had as a company car, but 5 Series driving middle managers again and again would buy Peugeot 308s (for economy), used Vauxhall Astras (very cheap) etc.

But would they be buying them brand new on PCP's or buying old used ones for cash and pocketing the "car allowance".

This is the sort of thing I'm talking about.

j4xxc said:

At the end of the day, my car allowance from work pays for this (circa £400 pcm after tax) so I suppose its whether I want a brand new car every 2 or 3 years or an asset at the end of the term courtesy of work

As I say, a lot of people seem to divorce the money they're spending based on "car allowance" when in fact every pound not spent on buying/running a car is an extra pound in their pocket, no different to if there were no "car allowance" and they were buying their car with their income (because in actual fact, that is precisely what they are doing).

[Emeye]

When I handed in my yellow SEAT Leon Cupra with dealer fitted body kit and alloys (not the usual company car - long story) and opted out of the company car scheme, I treated my £450 car allowance as a wage increase and there was no way I was going to piss it all away on a brand new diesel rep mobile. So I went and bought a 6 year old manual e39 530i sport.

Everyone thought i was mad, but the funny thing was that in 2008 the price of diesel compared to petty was such that the people who had leased brand new Audi A3 tdis were losing money on their mileage. With motorway driving suiting the big BMW, and with the larger engine petrol raking me in a much better pence per mile for fuel, along with no big monthly payment or depreciation, I was the smug one! It was 100% reliable too.

My bro does something similar now - he has pretty much the same Beemer I had, but with an auto box, so he is running a 9 year old luxury barnstormer when everyone else at his company has a brand new lease car every 3 years. I would say my bro has taken this to the extreme due to the age of the car, but he is a true petrol-head like me and loves his car, and even though it has cost him a fair bit to keep it maintained, he has pocketed a decent percentage of his car allowance.

The thing people forget is that the car allowance has to not only cover the lease or PCP but also the insurance and servicing and tyres etc etc

Edited by Emeye on Wednesday 9th January 23:11

[Steve vRS]

Sadly our company cash for car deal means the car must be less than 5 years old. They would prefer us to have a 320D Efficient Dynamics as a company car.

Steve

[wheedler]

Where is the £300 a month m135i,please ?

[Deva Link]

Ari said:

This is the sort of thing I'm talking about.

j4xxc said:

At the end of the day, my car allowance from work pays for this (circa £400 pcm after tax) so I suppose its whether I want a brand new car every 2 or 3 years or an asset at the end of the term courtesy of work

As I say, a lot of people seem to divorce the money they're spending based on "car allowance" when in fact every pound not spent on buying/running a car is an extra pound in their pocket, no different to if there were no "car allowance" and they were buying their car with their income (because in actual fact, that is precisely what they are doing).

Not really. Without the car allowance they’d be digging into their basic salary. Plus they’re saving tax by not having a company car, so the allowance is typically quite close to tax-free.

[Ari]

Deva Link said:

Not really. Without the car allowance they’d be digging into their basic salary. Plus they’re saving tax by not having a company car, so the allowance is typically quite close to tax-free.

I think you're missing the point slightly. The "car allowance" IS part of their basic salary. It is normal taxed income.

Their employer is paying them a wage relevant to the job they do and the fact that they need to use their own car for business use.

But then they're calling a part of it "car allowance", and the employee then see's it as "free money" to buy a car with.

So suddenly they have no qualms about blowing six grand a year (after tax, so maybe £10K of their gross salary!) on a PCP where they might never do that out of their income, despite the fact that there is no difference, every pound they don't spend on the lease car is an extra pound in their pocket, as surely as it would be if there were no "car allowance".

Hence statements like "work is paying for the car".

No they're not, work is paying a salary that reflects the employee using their own car for business use. But the employee is spending money that would otherwise be in their pocket on the car.

[Deva Link]

Ari said:

I think you're missing the point slightly. The "car allowance" IS part of their basic salary. It is normal taxed income.

Their employer is paying them a wage relevant to the job they do and the fact that they need to use their own car for business use.

No it's not - not in any scheme I've been part of (3 of them), and I understand it's generally done that way. There's a salary, plus car allowance. I daresay they exist, but I can't recall seeing one that said 'salary, including car allowance'.

It's explicity separate so that it doesn't count for overtime, pension purposes, life assurance, redundancy etc.

[braddo]

Deva Link said:

No it's not - not in any scheme I've been part of (3 of them), and I understand it's generally done that way. There's a salary, plus car allowance. I daresay they exist, but I can't recall seeing one that said 'salary, including car allowance'.

It's explicity separate so that it doesn't count for overtime, pension purposes, life assurance, redundancy etc.

But a car allowance is income taxed normally, isn't it?

The employer also gets the benefit of lower pension/life assurance/redundancy costs because the car allowance is excluded from calculations based on employees' salaries....

[CYMR0]

Agree with the above but if your options are:

1. Buy/lease a car under x years old; or
2. Don't get a car allowance

Then it kind of makes sense to spend it on a car that's much newer than you otherwise would.

Even buying at four years and changing at five could easily cost you £200 a month in depreciation (even if a £6k car loses 20% of its value, there's the trader's margin to fund) so buying newer and keeping longer can make finanical sense.

[RammyMP]

braddo said:

But a car allowance is income taxed normally, isn't it?

The employer also gets the benefit of lower pension/life assurance/redundancy costs because the car allowance is excluded from calculations based on employees' salaries....

That is excluded if you have a company car anyway, your salary is always the same, you have the option of either a company car or the allowance which is not related to any pension, etc. This is taxed but there is the tax benefit of running your own car for work purposes (45p a mile for first 10,000 miles then 25p).

[Deva Link]

braddo said:

But a car allowance is income taxed normally, isn't it?

Yes, but if it's replacing a company car then you get the benefit of saving company car tax.

braddo said:

The employer also gets the benefit of lower pension/life assurance/redundancy costs because the car allowance is excluded from calculations based on employees' salaries....

Exactly.

[braddo]

Just out of curiosity, is it common for companies to offer car allowances to staff even when many of them don't travel business miles (e.g. commuting only)?

[MJK 24]

Captain Muppet said:

MJK 24 said:

Captain Muppet said:

I know nothing about car finance...

This is unlikely to be the thread for you on that basis!

I came on to the thread to learn, and I have.

It's been very useful, which is rare.

Fair comment

[Ari]

Deva Link said:

No it's not - not in any scheme I've been part of (3 of them), and I understand it's generally done that way. There's a salary, plus car allowance. I daresay they exist, but I can't recall seeing one that said 'salary, including car allowance'.

It's explicity separate so that it doesn't count for overtime, pension purposes, life assurance, redundancy etc.

Ok, so your car allowance is £300/month after tax and you spend £200/month leasing a car. What happens to the other £100?

In fact, lets say you already own a 2 year old Ford Focus and decide to just use that, what happens to that £300/month?

[MJK 24]

Ari said:

Deva Link said:

No it's not - not in any scheme I've been part of (3 of them), and I understand it's generally done that way. There's a salary, plus car allowance. I daresay they exist, but I can't recall seeing one that said 'salary, including car allowance'.

It's explicity separate so that it doesn't count for overtime, pension purposes, life assurance, redundancy etc.

Ok, so your car allowance is £300/month after tax and you spend £200/month leasing a car. What happens to the other £100?

In fact, lets say you already own a 2 year old Ford Focus and decide to just use that, what happens to that £300/month?

My friend gets a £500 a month car allowance and happily drives around in his 120k mile 2003 Focus he bought new. He would be in the depths of depression if you forced him to lease a new car. He would rather have the money all day long!

[Pablo16v]

braddo said:

Just out of curiosity, is it common for companies to offer car allowances to staff even when many of them don't travel business miles (e.g. commuting only)?

It’s certainly common in the oil & gas industry for certain salaried jobs. I’ve had a car allowance and fuel card for the best part of 10 years now despite the majority of my business travel being overseas.

[Ari]

MJK 24 said:

My friend gets a £500 a month car allowance and happily drives around in his 120k mile 2003 Focus he bought new. He would be in the depths of depression if you forced him to lease a new car. He would rather have the money all day long!

Precisely, thank you!!

I'm not sure why this is so hard for some to grasp...

[JuanGandini]

wheedler said:

Where is the £300 a month m135i,please ?

I've been looking into the M135i beast for almost 6 months or so (still yet to fully convince myself to take the leap onto the BMW PCP). That's only because of personal work circumstances as I'm on a 6 month contract so can't budget for 3-4 years of payments at the moment. The £300 a month 'deal' entirely depends on the spec and term you opt for:

If you look at a base, manual 3 door model at £30,555 (minus the current £1,500 dealer deposit contribution) the BMW website shows a GFV of £14,085 after 3 years, or £11,475 after 4 years. Both of these GFVs are based on a 10k mileage per year. So, ignoring any variations of dealer discount on list price, increased spec and different mileage, you'd need to put in a deposit of c.£6,850 for the 3 year deal or c.£6,550 for the 4 year deal to get the monthly payments to £300.

You can check out the numbers on the website configurator as it includes all of the costs while you change the spec, term and mileage. Quite nifty really!