true value of a car

[CR0X]

does anyone have a model for working out the true value of a car over a determinable period with determinable mileage?

whatcar do something similar, but fixed mileage and fixed term which doesn't help really.

I am looking at benefits of contract hire, and what the true cost would be of ownership.

[JustinP1]

Without being too leftfield - there is only one true value of a car, or anything for that matter:

What someone is willing to pay for it.

Everything else is just a guess. I would take a What Car guide or something like that to be as close as you can get. Also remember in private sale you end up having to drop the cost to get a sale and advertising costs too.

Further to that you don't know the economic status two or three years in advance. If the car is still going to be worth a decent amount and would take most people to get a loan to buy it, then the value of what you can get for your car is based upon the amount of people who can get credit.

I did the same calculations myself for a purchase VS contract hire.

If the contract hire is two years and you are doing not much more than 10k a year then the contract hire won every time.

[CR0X]

hhmm, the calculations on this one are for 35K p.a., but it still works out, if I get target price taken into account.

The car is a Passat Bluemotion, my thinking is that residuals won't be too good on a car two years old with 75K p.a.

[JustinP1]

CR0X said:

hhmm, the calculations on this one are for 35K p.a., but it still works out, if I get target price taken into account.

The car is a Passat Bluemotion, my thinking is that residuals won't be too good on a car two years old with 75K p.a.

Ahh, then you have a totally different equation to look at.

What I would do is look through Autotrader for decent spec, similar high milage cars that are two years old and work out their percentage drop. Then work this same percentage drop into a guesstimate value.

If the figures were in any way reasonably close, I would go for the contract hire anyday just to cover your losses should the value drop more than expected.

[CR0X]

I defo prefer contract hire as it saves my time, which is where the greater cost comes in.

My accounts people prefer contract hire too, no depreciation, and regular payments.

I prefer contract hire mainly as I don't have to dispose of the vehicle which is the biggest problem.

It is always just a useful comparison.

[Vee]

CR0X said:

My accounts people prefer contract hire too, no depreciation, and regular payments.

Isn't a leased item treated as a fixed asset on the b/s ? Therefore depreciation charged ?

Perhaps base the calculation on a residual 40% of new price and do some sensitivity calculations to work out what residual you need to make it worthwhile buying.
Also consider what happens if the company you're leasing from goes bust (some recent ones haven't been paying for the car and they've been repossessed mid lease, despite the lessee being up to date).

[Howell811]

Vee said:

CR0X said:

My accounts people prefer contract hire too, no depreciation, and regular payments.

Isn't a leased item treated as a fixed asset on the b/s ? Therefore depreciation charged ?

Not that I know of, It's not a fixed asset as you never own it. It's a monthly cost.

[jeff m]

The residual price at the end of a lease is usually quite accurate.
So get a lease quote on the car in question.

[CR0X]

we normally lease of VW Financal Services, so can't see a problem there.