Leasing a company car - what would you do?

[irfan1712]

Evening all

after a bit of advice and general opinions. I had a new job offer today from a new company, with a nice salary plus a company car allowance of £300 p/month. My current situation is that i have a company car through my current employer, a 1.2 tfsi Seat Ibiza FR.. which isn't all that bad at all really. I pay peanuts on company car tax for it and thats basically it.. this will be the first time i will have to lease or buy a company car myself. My personal car for reference, is a C63.. not something id like to use on my commute as i'd rack up the miles swiftly, generally ruin it by going on site, and wear and tear would take over quickly. its a special car and i want it to feel special still, where as using it everyday i may get quite used to it!

so. ive been exploring two options:

Option 1 - Lease a new car on a contract hire, for the sensible period of 24 months. i've been exploring many options inside the £300 bracket and below. Currently considering 116d /120d MSports, A180/A200d AMG lines, Golf GTD's, and i noticed a Focus ST-TDCi seemed attractive. I have no real preference other than id like the car to look nice (i.e M Guise / SLine etc) for it to be diesel, and for it to be generally a nice place to be. I wouldn't mind it having a bit of 'poke' i/e GTD's and the ST TDCi, but thier not deal breakers if i can find a significantly better deal with something like the 180d or 116d.. Downsides are that i'll get taxed on said car allowance so il be dipping into my pocket either way really, and i will need to fork out a minimum of 3 months upfront for the initial payment...and then do it all again in 24months time.

Option 2 - Buy a used, but decent used car along the lines of a MK5 Golf GT TDI and the like for no more than £4-5k max and either run it for a year to two and then sell it, to use as a deposit for a new leased car, or simply run it to the ground. Downsides here are that for 4-5k, 'good' diesel cars seem to have been to the moon and back regarding mileage, and i will have to either take finance out on the car or get a personal loan to fund it.

now that i have the option i don't really want a small car like the ibiza again if i can help it as i'll be on the motorway everyday, the car was a fine cruiser but got a bit wheezy on long journeys. I'd like a golf sized car and above ideally.

so thats basically my predicament.. what would you guys do?

[CYMR0]

Option 3: keep what you currently have, except you get a new one on a lease.

£100ish a month for the lease, though the rest will get eaten up with deposit, insurance, and tax (assuming that the £300/month is before tax, it's not very much at all!)

[mikeN54]

£300 / month gross car allowance will only leave you with £180 or £240 depending on whether you are a 40 or 20% rate payer. It's £3600 a year gross, so it might tip you into 40% tax if you aren't there now, so best work it out. (think about paid overtime too).

What mileage rate will they pay? Remember you can claim back income tax on the difference between the rate they pay you and the HMRC approved mileage rate (45p/25p mile).

In your position I would lease another cheap utility vehicle, you've got the C63, so you need a workhorse car not another thing to clean and fuss over. (I work on sites too, dirty boots are no fun in a bmw.)

Best deal around now in that respect is the Skoda Yeti Monte Carlo DSG from CVL, Torquey 1.2 TSI (petrol) but does 50+mpg combined (Yetis are well rated by EVO magazine to drive)

£71.99/month on 2 years, £1800 initial, 8000 miles a year. (all INC VAT) All in cost £3635 over 2 years or £150/m!!! bonkers motoring bargain

https://www.centralukvehicleleasing.co.uk/vehicle/...

Edited by mikeN54 on Wednesday 5th October 14:46

[marcusgrant]

two questions:

1) how many miles are you doing a year? (edit - for work)

2) does the car have to be newer than 5 years or something? Generally I thought car allowances stipulate the maximum age of a car. Although my place does and no one sticks to it. A friends place of work though is very strict though.

[irfan1712]

thank for the input so far all.

£300 is before tax which ive cleared up with the employer today.. as mentioned already, doesn't leave with an awful lot to play with per month. i have negotiated an ester £1000 on the salary however, so i feel it balances things out a bit better.

annual milage is no more than 15,000. i am able to claim back 11p a mile (seems low but is company standard) but again as mentioned I'm not too bothered on that as il just claim that on a tax return as the end of the tax year.

I've been shopping around a lot today - looking at leases on diesel focus/a class/golfs and polos, online seems to be beat dealers hands down. I have also started looking at diesel a4's /320ds and so forth with the option of taking the loan out to fund them, I'm still none the wiser and just can't decide!

im not too fussed about keeping the car at the end and don't have an issue with starting a lease again in two years time. choices choices

[CYMR0]

irfan1712 said:

thank for the input so far all.

£300 is before tax which ive cleared up with the employer today.. as mentioned already, doesn't leave with an awful lot to play with per month. i have negotiated an ester £1000 on the salary however, so i feel it balances things out a bit better.

annual milage is no more than 15,000. i am able to claim back 11p a mile (seems low but is company standard) but again as mentioned I'm not too bothered on that as il just claim that on a tax return as the end of the tax year.

I've been shopping around a lot today - looking at leases on diesel focus/a class/golfs and polos, online seems to be beat dealers hands down. I have also started looking at diesel a4's /320ds and so forth with the option of taking the loan out to fund them, I'm still none the wiser and just can't decide!

im not too fussed about keeping the car at the end and don't have an issue with starting a lease again in two years time. choices choices

As you have a C63 as well I'll assume you pay 40% tax.

So £3,600 after tax = £2,160. You also have an additional 13.6ppm to play with in terms of claiming back tax on the difference between your mileage allowance and the HMRC allowed 45p - up to 25k, and another 5k @ 25p (so 5.6ppm). So your total car budget (assuming 11ppm covers fuel only) is

£2,160
£1,360
£280

= £3,800

£3,800 p.a. Allowing £400 a year for insurance that gives you an all-in budget of £3,400 to fund a maintained 15k per year lease, or assuming six tyres and two services over 30k in two years about £3k without maintenance.

On a 24-month, 9+23 deal, that's £6k, so £156.25 + VAT per month on a 9+23. You can get an Ibiza 110 FR Tech for £135.85/month on that basis plus a £360 admin fee.

https://www.contracthireandleasing.com/car-leasing...

I haven't included it in my calculations, but you'd probably also want to consider your existing company car tax saving to put you in the same position as you are, i.e., if you pay £50 a month in tax you could (but wouldn't have to) increase your budget by £50 a month and be no worse off financially than you would with your current company car and your new salary.

Edited by CYMR0 on Wednesday 5th October 16:15

[irfan1712]

CYMR0 said:

irfan1712 said:

thank for the input so far all.

£300 is before tax which ive cleared up with the employer today.. as mentioned already, doesn't leave with an awful lot to play with per month. i have negotiated an ester £1000 on the salary however, so i feel it balances things out a bit better.

annual milage is no more than 15,000. i am able to claim back 11p a mile (seems low but is company standard) but again as mentioned I'm not too bothered on that as il just claim that on a tax return as the end of the tax year.

I've been shopping around a lot today - looking at leases on diesel focus/a class/golfs and polos, online seems to be beat dealers hands down. I have also started looking at diesel a4's /320ds and so forth with the option of taking the loan out to fund them, I'm still none the wiser and just can't decide!

im not too fussed about keeping the car at the end and don't have an issue with starting a lease again in two years time. choices choices

As you have a C63 as well I'll assume you pay 40% tax.

So £3,600 after tax = £2,160. You also have an additional 13.6ppm to play with in terms of claiming back tax on the difference between your mileage allowance and the HMRC allowed 45p - up to 25k, and another 5k @ 25p (so 5.6ppm). So your total car budget (assuming 11ppm covers fuel only) is

£2,160
£1,360
£280

= £3,800

£3,800 p.a. Allowing £400 a year for insurance that gives you an all-in budget of £3,400 to fund a maintained 15k per year lease, or assuming six tyres and two services over 30k in two years about £3k without maintenance.

On a 24-month, 9+23 deal, that's £6k, so £156.25 + VAT per month on a 9+23. You can get an Ibiza 110 FR Tech for £135.85/month on that basis plus a £360 admin fee.

https://www.contracthireandleasing.com/car-leasing...

I haven't included it in my calculations, but you'd probably also want to consider your existing company car tax saving to put you in the same position as you are, i.e., if you pay £50 a month in tax you could (but wouldn't have to) increase your budget by £50 a month and be no worse off financially than you would with your current company car and your new salary.

Edited by CYMR0 on Wednesday 5th October 16:15

thank you for such a fantastic reply. i am not in the 40% bracket so i would have a little bit more to play with, however, insurance is an issue as ive used all my no claims bonus on my C63! So essentially i started again as no insurers would 'mirror' my no claims.

i thought about leasing all week last week and was set on a nice new car. I then shopped about and thought, i'll buy something half decent that will last me a long time - i'll either run said car into the ground or change it when I'm ready for a change. Something that is good on juice, a nice place to be, has dated well, and looks reasonably respectable when meeting clients and so forth.

so here's what i bought!





Its a 2007 320d M Sport - manual - alcantara interior and otherwise standard. 130k on it with a full service history and to be honest it is in amazing condition, i gave it some proper TLC today and it has come up a real treat. all for a bargain £5,500!

insurance however was a nightmare. as said i couldn't use my 5 years no claims as i already used them on the merc, so i put this on a multi car policy with the mercedes for £1200. which is sickening when i pay £900 for the C63 albeit with the 5 years ncb, at 25 years old its a bargain. Nevermind.

just need to get used to manually swapping cogs and the power delivery of a diesel! Im like a learner driver pulling off haha. Ample torque for a motorway cruiser, a remap could come into the equation if i ever get bored though.

Thanks again for your input chaps.

Irfan

[SWoll]

A C63 and a BMW 320D and not in the 40% tax bracket? You must eat baked beans for every meal?

The 3 series looks lovely by the way, very tidy for the age and mileage. You are fortunate that your new company doesn't have any restrictions in place on what the allowance can be spent on. A lot have become quite draconian about the age and mileage that's acceptable due to people running some right old bangers for pennies and pocketing the rest.

[irfan1712]

SWoll said:

A C63 and a BMW 320D and not in the 40% tax bracket? You must eat baked beans for every meal?

The 3 series looks lovely by the way, very tidy for the age and mileage. You are fortunate that your new company doesn't have any restrictions in place on what the allowance can be spent on. A lot have become quite draconian about the age and mileage that's acceptable due to people running some right old bangers for pennies and pocketing the rest.

Two jobs, not much of a social life and generally managing my finances well. Im a quantity surveyor, its what we do! ha.

Thanks, i agree! it really is incredibly clean for its age and drives faultless, hard to believe its 9 years old. Very true, i did tell them i'd look into leasing new or buying used and they were fine with either option, luckily!