Car Finance, have I done the right thing?
Discussion
Trying to sort my life out but that's another story, part of it involved getting a new job which should be better for my mental state.
Car allowance of £6k pa at 40% tax and 30k miles pa, there is also no mileage allowance only fuel paid from company expenses the rest claimed as tax relief.
My working - based on car over 48 months of ownership
40% of 6k / 12 month is 300pcm
Lets say 10ppm for fuel so 10k @ 35p and 20k @15p = £6500, tax relief at 40% = 2560 / 12 = £213pcm
Obviously in year one I wont see the relief so lets say I get 4 years allowance and 3 years relief whilst I have this car,
300 x 48 = 14400
213 x 36 = 7680
Total 22080 / 48 = £460
Now here's the pain, the company are strict on vehicles and also do not want the payment to exceed the allowance (presume this is to rule out me putting £500 a month in of my own money because its not fair on others who cant, so we need a car funded at around £300pcm with the rest for everything else and maybe a few mcd drive thru coffees.
Most people are buying cars around the 12k mark but I thought I could do better, rightly or wrongly this is what I've done and as its super early Ill just round up the figures.
Car - 2019 320 Msport with a lot of options and sub 10k miles
This is what the salesman wanted me to take, presumably to bum me with the most interest possible
PCP
Purchase £19.5k
£0 deposit (from me)
£400pcm x 48
5k GFV
9.9% rate
3.5ppm over mileage charge
For taking this deal they would warranty the car for a further 12 month outside the one its already got, and give a deposit of £1.5k.
What I've done
Took the deal
Paid off 13k (£18k - GFV)
Repayment of the 13k is £270pcm and the interest on the GFV is £20pcm so under the target of £300pcm
Considerations,
I dont care about the keeping the car
The PCP means I can just bin it off at the end
If the government crack down further on diesel I am covered by the above if values get ruined
The garage unless they get super pissed Im not paying a lot of interest will be looking to upgrade the car before end of term or if its going totally wrong I can VT if it suits what Ive paid and what mileage etc.
Thoughts?
Car allowance of £6k pa at 40% tax and 30k miles pa, there is also no mileage allowance only fuel paid from company expenses the rest claimed as tax relief.
My working - based on car over 48 months of ownership
40% of 6k / 12 month is 300pcm
Lets say 10ppm for fuel so 10k @ 35p and 20k @15p = £6500, tax relief at 40% = 2560 / 12 = £213pcm
Obviously in year one I wont see the relief so lets say I get 4 years allowance and 3 years relief whilst I have this car,
300 x 48 = 14400
213 x 36 = 7680
Total 22080 / 48 = £460
Now here's the pain, the company are strict on vehicles and also do not want the payment to exceed the allowance (presume this is to rule out me putting £500 a month in of my own money because its not fair on others who cant, so we need a car funded at around £300pcm with the rest for everything else and maybe a few mcd drive thru coffees.
Most people are buying cars around the 12k mark but I thought I could do better, rightly or wrongly this is what I've done and as its super early Ill just round up the figures.
Car - 2019 320 Msport with a lot of options and sub 10k miles
This is what the salesman wanted me to take, presumably to bum me with the most interest possible
PCP
Purchase £19.5k
£0 deposit (from me)
£400pcm x 48
5k GFV
9.9% rate
3.5ppm over mileage charge
For taking this deal they would warranty the car for a further 12 month outside the one its already got, and give a deposit of £1.5k.
What I've done
Took the deal
Paid off 13k (£18k - GFV)
Repayment of the 13k is £270pcm and the interest on the GFV is £20pcm so under the target of £300pcm
Considerations,
I dont care about the keeping the car
The PCP means I can just bin it off at the end
If the government crack down further on diesel I am covered by the above if values get ruined
The garage unless they get super pissed Im not paying a lot of interest will be looking to upgrade the car before end of term or if its going totally wrong I can VT if it suits what Ive paid and what mileage etc.
Thoughts?
Does your company offer a company car option instead of you buying your own car? I am usually for taking the allowance and getting my own car, but in this instance I think you might be better off going for a company car?
If it was me I would be looking at getting the car with the lowest BIK percentage possible.
Do you have a company car list?
If it was me I would be looking at getting the car with the lowest BIK percentage possible.
Do you have a company car list?
I know of a chap who had a similar car allowance deal and also went for a BMW.
Due to covid he was made redundant and got stuck with the car and its monthly payments. He managed to VT as he'd had the car long enough, but then got stung for mileage charges.
A costly mistake that he will not repeat again.
Due to covid he was made redundant and got stuck with the car and its monthly payments. He managed to VT as he'd had the car long enough, but then got stung for mileage charges.
A costly mistake that he will not repeat again.
What are the car restrictions?
Max age is what
Min number of doors
Max used price
Also as it appears there is very tight control on the car ie not what you’d buy you need to find out what recourse you have if circumstances change? Ie loss of job or if you need a bigger car due to having children it’s not inclusive to force someone to use a small car when it’s suitable for personal requirements.
Max age is what
Min number of doors
Max used price
Also as it appears there is very tight control on the car ie not what you’d buy you need to find out what recourse you have if circumstances change? Ie loss of job or if you need a bigger car due to having children it’s not inclusive to force someone to use a small car when it’s suitable for personal requirements.
Whatsmyname said:
Trying to sort my life out but that's another story, part of it involved getting a new job which should be better for my mental state.
Car allowance of £6k pa at 40% tax and 30k miles pa, there is also no mileage allowance only fuel paid from company expenses the rest claimed as tax relief.
My working - based on car over 48 months of ownership
40% of 6k / 12 month is 300pcm
Lets say 10ppm for fuel so 10k @ 35p and 20k @15p = £6500, tax relief at 40% = 2560 / 12 = £213pcm
Obviously in year one I wont see the relief so lets say I get 4 years allowance and 3 years relief whilst I have this car,
300 x 48 = 14400
213 x 36 = 7680
Total 22080 / 48 = £460
Now here's the pain, the company are strict on vehicles and also do not want the payment to exceed the allowance (presume this is to rule out me putting £500 a month in of my own money because its not fair on others who cant, so we need a car funded at around £300pcm with the rest for everything else and maybe a few mcd drive thru coffees.
Most people are buying cars around the 12k mark but I thought I could do better, rightly or wrongly this is what I've done and as its super early Ill just round up the figures.
Car - 2019 320 Msport with a lot of options and sub 10k miles
This is what the salesman wanted me to take, presumably to bum me with the most interest possible
PCP
Purchase £19.5k
£0 deposit (from me)
£400pcm x 48
5k GFV
9.9% rate
3.5ppm over mileage charge
For taking this deal they would warranty the car for a further 12 month outside the one its already got, and give a deposit of £1.5k.
What I've done
Took the deal
Paid off 13k (£18k - GFV)
Repayment of the 13k is £270pcm and the interest on the GFV is £20pcm so under the target of £300pcm
Considerations,
I dont care about the keeping the car
The PCP means I can just bin it off at the end
If the government crack down further on diesel I am covered by the above if values get ruined
The garage unless they get super pissed Im not paying a lot of interest will be looking to upgrade the car before end of term or if its going totally wrong I can VT if it suits what Ive paid and what mileage etc.
Thoughts?
Car allowance is treated as income, so you'll pay NI on it as well, meaning you wont get the full £300 pcm in your pocketCar allowance of £6k pa at 40% tax and 30k miles pa, there is also no mileage allowance only fuel paid from company expenses the rest claimed as tax relief.
My working - based on car over 48 months of ownership
40% of 6k / 12 month is 300pcm
Lets say 10ppm for fuel so 10k @ 35p and 20k @15p = £6500, tax relief at 40% = 2560 / 12 = £213pcm
Obviously in year one I wont see the relief so lets say I get 4 years allowance and 3 years relief whilst I have this car,
300 x 48 = 14400
213 x 36 = 7680
Total 22080 / 48 = £460
Now here's the pain, the company are strict on vehicles and also do not want the payment to exceed the allowance (presume this is to rule out me putting £500 a month in of my own money because its not fair on others who cant, so we need a car funded at around £300pcm with the rest for everything else and maybe a few mcd drive thru coffees.
Most people are buying cars around the 12k mark but I thought I could do better, rightly or wrongly this is what I've done and as its super early Ill just round up the figures.
Car - 2019 320 Msport with a lot of options and sub 10k miles
This is what the salesman wanted me to take, presumably to bum me with the most interest possible
PCP
Purchase £19.5k
£0 deposit (from me)
£400pcm x 48
5k GFV
9.9% rate
3.5ppm over mileage charge
For taking this deal they would warranty the car for a further 12 month outside the one its already got, and give a deposit of £1.5k.
What I've done
Took the deal
Paid off 13k (£18k - GFV)
Repayment of the 13k is £270pcm and the interest on the GFV is £20pcm so under the target of £300pcm
Considerations,
I dont care about the keeping the car
The PCP means I can just bin it off at the end
If the government crack down further on diesel I am covered by the above if values get ruined
The garage unless they get super pissed Im not paying a lot of interest will be looking to upgrade the car before end of term or if its going totally wrong I can VT if it suits what Ive paid and what mileage etc.
Thoughts?
It's ignored for pension purposes though, so no deduction applies on that front
You've effectively negotiated at least £2k of "savings" on the BMW between deposit contribution and extra warranty which seems decent on the face of it, although 10% APR isn't. Looks like you have a reasonably sound plan to counteract that though.
Your tax relief on mileage is also reasonably sound, although claiming relief on anything over £2500 per year from HMRC will mean having to do a self assessment if you don't alreadyt
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