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Thread: Car Allowance conundrum

  1. #1

    Car Allowance conundrum

    I have got myself in a right royal tangle and can’t see the wood for the trees. I’ve been a company car driver for the last 5 years but after accepting a new job I am destined to lose that luxury and a car allowance awaits.

    Currently drive a 530e which, whilst is very nice, I’m not overly fussed with. It was a tax efficient vehicle and I won’t be sorry to see it go.

    So now to the conundrum, I will receive £8k car allowance and 33p per mile which is very generous. I expect to do c. 15k miles per annum and have been looking at new pcp and lease deals. I thought that I had settled on a new Skoda Kodiak sportline in 2.0 Diesel DSG variety. £500 down and £408 p/m.

    I can’t however shake the feeling that it’s a massive waste of money though. I can get a Skoda Kamiq on a 2 year lease for £240 a month. It’s not the same sportline spec as the Kodiak but it’s a not poverty spec either, plenty of toys and a massive £170 a month less.

    I know I’m not comparing apples with apples but I have torn myself inside out trying to decide what I want to do.

    Then there’s the whole 2-3 yr old low mileage vehicles which I could purchase and do away with the whole pcp/ depreciation mess.

    What would you guys do?

  2. #2
    Why not consider something like a 2-3 year old used approved with 24 months warranty. Should be easily affordable and your choice of cars and should be higher spec etc.
    It's just a matter of time...

  3. #3
    Master
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    I have always had a car allowance rather than company car (even when it was an option) and I would do what the poster above has said. I have tended to find for me that the 4 to 6 year old mark is a good compromise on age/mileage/condition/price and still being serviced and maintained correctly. Once you get past that it seems it becomes more of a lottery as to how it has been treated etc. That means your budget goes further in terms of what you are getting for your money but I appreciate others may prefer new or nearly new.

  4. #4
    Master
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    That £170 a month conundrum is no different than buying a more expensive watch, spending more on a holiday, eating out at more expensive restaurants etc. Only you know the value of that £170 and either 1. What difference it will or won’t make to your lifestyle or 2. How much is that £170 of extras worth to you baring in mind that you’ll be doing 300 miles a week? That’s a long time in the car to me and I’d want the comforts, you might not.

    I’d still lease new though, it’s part of your package, you won’t have to worry about MOT’s, services and tyres for a while.

    Once you’ve made the decision, accept it and don’t beat yourself up thinking you should have done the other (something my wife tells me I do all the time!).

  5. #5
    Master
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    I have always opted out, used the funds from the company to increasingly upgrade my car over time.

    Started out with something normal, with £7k a year, paid off in full after 3 yrs, then used that car as the deposit for the next car / sell to then upgrade.

    I have no kids, so options have been wide but enjoyed 'paid for by the company' cars of ST170, 1 series, S2000, Z4, Z4 coupe, Z4M, JCW x 2 and M4. My mileage has varied but 10k a year average. Loved the company funded cars vs my true company cars I used to have.

  6. #6
    Master
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    Company I work for is £3096 cash allowance a year plus 70 a month operational allowance. 8k is pretty amazing. You can lease the best off the best in that!

  7. #7
    Thanks for the input. What I’m struggling with though is that I don’t have cash lying around to put down a decent deposit or buy a car outright and the finance deals on new vs nearly new etc seem to be ridiculous. The contributions, low apr and discounts on new mean that the kodiak I have spec’d comes in only £60 more than buying a used 3 year Passat r line diesel.

    I’m after something which is big enough for 2 kids and comfortable enough for me to enjoy my time in the car. I’ve looked at Passats, Superbs and a few others. Anybody got any suggestions that would fit the above criteria? Can’t be older than 3 years old is the only restriction.

  8. #8
    You may also want to check any stipulation that the company makes over the age of the car and co2 allowance which can be a bit of a headache. I know that BMW x series cars are all on low deposits at the moment (equivalent to one month payment) so that could be an option.


    Sent from my iPhone using TZ-UK mobile app

  9. #9
    Grand Master JasonM's Avatar
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    Don’t forget the allowance is taxed as per your salary.
    I get an allowance too, but am able to claim the max 45/25p a mile, I decided to buy a middle of the road 3 year old well maintained car ( Passat Estate) and it works out cost neutral for 3 years or so and it is then mine at the end of the finance period. Works for me. I’m past caring about having a status car on the drive.
    Cheers..
    Jase

  10. #10
    Whilst a number of colleagues have opted for the Lease route, I’ve never been able to make the Lease figures work for me (based on more than the standard 10,000 miles per annum), in comparison to buying a car outright at 2-3 years old.

    Even being very pessimistic re budgeting for depreciation, tyres, MOT re-tests, servicing, one-off ‘hits’, trade-in value etc., outright ownership seems more financially attractive in all but the very worst case scenarios. And even for that, good Warranties don’t cost a huge amount.

    I can absolutely see that Leasing is easier & less hassle, and if you are not fussy about the car make & model there are some great deals to pounce upon, but nothing that would make me bite. Of course, some people like to have the latest model of car on their drive, but I’m not swayed by that myself.

  11. #11
    Have not nearly 15 years of car allowance, have tried all options. Usually my milage is 12-15k, buying a used car is ok but got hit with some big bills. So recommend a really good warranty if you go that route, but also think about tires and servicing. PCP are always trouble in my opinion and look expensive compared to a lease. I usually go 2 years as I like change cars and also avoid big service bill or tire costs or fully maintained.
    An example

    Factor in the extra miles in your costs, it’s not usually that bad.

    https://www.contractcars.com/product...-s-line-lease/

  12. #12
    Quote Originally Posted by johnny778 View Post
    Thanks for the input. What I’m struggling with though is that I don’t have cash lying around to put down a decent deposit or buy a car outright and the finance deals on new vs nearly new etc seem to be ridiculous. The contributions, low apr and discounts on new mean that the kodiak I have spec’d comes in only £60 more than buying a used 3 year Passat r line diesel.

    I’m after something which is big enough for 2 kids and comfortable enough for me to enjoy my time in the car. I’ve looked at Passats, Superbs and a few others. Anybody got any suggestions that would fit the above criteria? Can’t be older than 3 years old is the only restriction.
    Yes, but you then own the car and can trade it in after a couple of years and do it again.

    Just far more choice available buying your own, and loans are close to an all time low.
    It's just a matter of time...

  13. #13
    Grand Master wileeeeeey's Avatar
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    Quote Originally Posted by Omegamanic View Post
    Why not consider something like a 2-3 year old used approved with 24 months warranty. Should be easily affordable and your choice of cars and should be higher spec etc.
    Exactly what I would do.

  14. #14
    Master
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    Have you looked at Evogo in Sheffield short term contract hire 1 month deposit.
    we use them for our company cars and just about to get 2 more new ones for the 4th time.

  15. #15
    Craftsman
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    Quote Originally Posted by johnny778 View Post
    Thanks for the input. What I’m struggling with though is that I don’t have cash lying around to put down a decent deposit or buy a car outright and the finance deals on new vs nearly new etc seem to be ridiculous. The contributions, low apr and discounts on new mean that the kodiak I have spec’d comes in only £60 more than buying a used 3 year Passat r line diesel.

    I’m after something which is big enough for 2 kids and comfortable enough for me to enjoy my time in the car. I’ve looked at Passats, Superbs and a few others. Anybody got any suggestions that would fit the above criteria? Can’t be older than 3 years old is the only restriction.
    If you were looking at a new Kodiak try the Superb estate, you get more value and if you go 2-3 year old, then swap it in a couple of years. Rinse and repeat, eventually you will own a decent motor outright being paid for by your allowance.

  16. #16
    Re used...remember a personal loan will likely be much cheaper than car financing

  17. #17
    Master
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    Quote Originally Posted by b11ocx View Post
    Re used...remember a personal loan will likely be much cheaper than car financing

    I did the personal loan way. The one issue I had is when I came to get finance again they talked about a £30k unsecured loan. I don't think car finance will be looked in the same way.

  18. #18
    Quote Originally Posted by JPCain86 View Post
    I did the personal loan way. The one issue I had is when I came to get finance again they talked about a £30k unsecured loan. I don't think car finance will be looked in the same way.
    This is something to consider if you need to borrow extra funds for something else. Also if you need to exit early a car loan has some benefits

  19. #19
    Master Wolfie's Avatar
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    I opted out and I drive a ten your old Touran and go on more holidays instead…. But, I do about 2-3k pa on company business and it’s more of a perk than a job requirement thing…. I’d like a nicer car, but, I like more and better holidays more! The £2k+ delta gets a pretty nice trip!

  20. #20
    Craftsman
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    I pulled out of our company car scheme nearly 4 years ago and went onto taking an allowance and leasing. In my case, I have kept the lease monthlies as tight as possible within reason, so for example I am currently driving an Octavia that is leased for just over £160 per month for 15,000 miles PA. Add in the first month's larger payment and fees and the total cost over 2 years is just over £6k which gives me a healthy profit against my allowance - If I can continue to lease at circa £250/month all in then the figures work quite nicely. Buying the lease deal rather than rigidly looking for a particular car make and model is the key to getting a good deal, although the market seems pretty sparse at the moment. There are some properly cheap deals floating about for the new model Octavia but not much else I've seen for cars bigger than a supermini.

    Don't forget to factor in the available tax savings available if your mileage rate on top of the allowance is less than the HMRC allowable figures of 45p/mile (1st 10000 miles) and 25p mile thereafter. In my case that tax rebate normally covers about a third on the lease cost per year.

    If you combine the above with a bit of man maths around not paying BIK on a company car the figures work out very attractively indeed.

  21. #21
    Cheers for the input everyone. I’ve just signed on the dotted line for a brand new BMW 530d M sport. I decided that I wanted to go new for the peace of mind and managed to get a stupidly good deal from BMW on 1.9% finance.

    Came out at £450 a month with £500 deposit which I’m happy with. Might have to keep an eye on the speedo as it’s a lot faster than what I’ve been used to.

  22. #22
    Quote Originally Posted by johnny778 View Post
    Cheers for the input everyone. I’ve just signed on the dotted line for a brand new BMW 530d M sport. I decided that I wanted to go new for the peace of mind and managed to get a stupidly good deal from BMW on 1.9% finance.

    Came out at £450 a month with £500 deposit which I’m happy with. Might have to keep an eye on the speedo as it’s a lot faster than what I’ve been used to.
    Excellent choice sir a fantastic piece of kit. Is it the out going model or the face lifted model coming to dealerships from next month?

  23. #23
    Quote Originally Posted by glyn696486 View Post
    Excellent choice sir a fantastic piece of kit. Is it the out going model or the face lifted model coming to dealerships from next month?
    Outgoing model. The deals on the odd few still knocking about in stock seem to be very strong. The print off I have shows a £16k discount split across main dealer and central contributions. Managed to get the 530d for the same cost per month as the 520d I originally enquired about.

  24. #24
    Quote Originally Posted by johnny778 View Post
    Outgoing model. The deals on the odd few still knocking about in stock seem to be very strong. The print off I have shows a £16k discount split across main dealer and central contributions. Managed to get the 530d for the same cost per month as the 520d I originally enquired about.
    Great deal especially with that deposit. A couple of months back I enquired about the same car and they wanted a £5k deposit!


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