which car with an allowance?

ijth

Hi all
I'm fortunate enough to be getting a £7k p.a. car allowance with a new post. I'm a higher rate taxpayer so will see about £350 per month of this. I've always run old cars and for a change, fancy getting something smarter and newer. Although the allowance doesn't come with any specifications, my long-standing employer has always been good to me so I want to spend most if not all of the allowance on the car rather than buying a banger and keeping the cash! I've got my eye on a Merc C-class or Audi A4.
What's the best way of going about this? Some of the deals on new cars look good but I also like nearly-new to avoid the hit of depreciation. Would you recommend buying a new car on finance? A nearly-new one on finance? or a 2-4 year-old car outright for cash? I could afford to buy a car for £15k cash if that helps with the advice.

Many thanks!

gggareth

ijth wrote: »

Hi all
I'm fortunate enough to be getting a £7k p.a. car allowance with a new post. I'm a higher rate taxpayer so will see about £350 per month of this. I've always run old cars and for a change, fancy getting something smarter and newer. Although the allowance doesn't come with any specifications, my long-standing employer has always been good to me so I want to spend most if not all of the allowance on the car rather than buying a banger and keeping the cash! I've got my eye on a Merc C-class or Audi A4.
What's the best way of going about this? Some of the deals on new cars look good but I also like nearly-new to avoid the hit of depreciation. Would you recommend buying a new car on finance? A nearly-new one on finance? or a 2-4 year-old car outright for cash? I could afford to buy a car for £15k cash if that helps with the advice.

Many thanks!

350 x 40 = 14k... so if you brought a 2-4 yr old for 14k and kept it for 40 months it would be pretty much free. but dont forget your ins/tax/ servicing costs need to be added in..If you kept it longer then it's money in your pocket..

ilovebanksMCMLXXXI

Hi

I own a vehicle leasing company and prior to that was a car salesman for many, many years.

If depreciation concerns you do NOT buy a new car because you will lose at least 20% the minute you drive the car away from the dealer........... that is not a myth, it's a fact.

Is it a £7,000 allowance spread over the year? i.e. you're in effect getting a wage rise.

If it is I'd look at PCH (Personal Contract Hire). You have no worries with depreciation as you never own it and you can build maintenance etc into the deal so all you have to worry about is fuel and insurance.

Believe me, I've worked in the motor industry my entire career and have been lucky enough have some of the most executive and luxury cars you can get but I'd never, ever advise somebody to BUY a car if it's not necessary.

A car is a depreciating asset and unless you're buying a classic it's not going to go up in value so why not pay a minimal deposit and have a new car every 3 or 4 years?

People always say to me "yes, but I want something to show for my money"

That's fair enough but consider this - If you're looking at Merc, BMW, Audi etc what you will pay in rentals over 3 or 4 years will be less than what you lose in depreciation over the same term.

Kind regards

harveybobbles

ilovebanksMCMLXXXI wrote: »

If depreciation concerns you do NOT buy a new car because you will lose at least 20% the minute you drive the car away from the dealer........... that is not a myth, it's a fact.

What most people doen't realise is that of that 20% that you lose, 17.5% of it is VAT...

BillTrac

I get a similar amount per year (paid monthly of course alongside my salary). I worked out, as you have what I would have left after deductions. I then allowed a certain amount for insurance. I also allowed a small amount as a fall-back for tyres etc. The balance that was left was what I worked out could pay for a car I could sensibly afford. Been on the scheme two and a half years now. On my second car and the first was a year old, this one was 8 months old when I got it two weeks ago. Paid all the cost for the first one, this time I had a car to PX which covered half the cost of this one.
Feel better off financially, as previously I had company cars, and of course you get hit by BIK tax which is a large chunk.

ilovebanksMCMLXXXI

harveybobbles wrote: »

What most people doen't realise is that of that 20% that you lose, 17.5% of it is VAT...

That's exactly right - 17.50% will go immediately in VAT

ijth

thanks for the good advice everyone. if i were to go the personal leasing route , would you recommend i do so with the dealer themselves or a third party company? if i went third party, would i get the same service/care from my local dealer, e.g. mercedes?

gggareth

try www.lingscars.com

ilovebanksMCMLXXXI

ijth wrote: »

thanks for the good advice everyone. if i were to go the personal leasing route , would you recommend i do so with the dealer themselves or a third party company? if i went third party, would i get the same service/care from my local dealer, e.g. mercedes?

You will not get the best leasing deal going to a dealer.

I will not bias this post by offering you the details of my own leasing company as that will appear as if I've tried to steer you down that route.

I genuinely believe Personal Contract Hire is by far your best option.

Contact a leasing company directly - I've noticed somebody has suggested lingcars.co.uk. They are a broker and you'll pay a higher rate. Nothing against lingcars.co.uk as she is very succesful at what she does but you're looking for a one-off deal.

If the company you work for is a 'large' organisation they may be able to get you a PSH deal direct with a funder - other than that it's not difficult to arrange it yourself.

The best deal you can get will be to arrange a Fully Maintained Personal Contract Hire deal.

The normal parameter for this will be 3x35 or 3x47. i.e. 3 rentals in advance followed by 35 or 37 rentals. The terms available to you are 12-60 months although in the current financial climate getting 12 or 24 deals isn't easy - especially 12.

Included in this will be manufacturer servicing (so you have the dealer back-up), tyres, breakdown, general maintenance like brakes, shocks etc and road tax.

You can go to a local dealer and test drive the car and enjoy the free coffee etc - Just make sure you tell the salesman you intend to ensure the leasing company orders the car from him...... nothing turns a salesman off quicker than telling him you're a company car driver who cannot nominate where his new car comes from! That's guaranteed,

As I mentioned in my previous post - all you need to worry about then is fuel and insurance.

If you can find a better alternative financially to PCH when using a company vehicle allowance I will be extremely surprised.

Good luck

Kind regards

Ling_Valentine

Thanks gggggggggareth.

ilovebanks etc... why on earth do you think you will pay a higher rate from me? Have you read any of my 1,535 testimonial letters - there are errr 1,535 customers who would disagree with you there.

My business would simply not work if I was more expensive, actually due to my efficiencies and IT I need a lower margin to cover overheads and can be cheaper in most cases. I am a pure internet business. Not just a business with a website. Dealerships in particular have got massive retail overheads to cover. I would say just about every single broker in the UK has higher overheads than I do.

Ask people.

I would not advise full maintenance contracts because you can often do servicing much cheaper at non-franchised dealers on new cars (while keeping your full warranty in force). Who wants to pay main dealer servicing prices? Plus you can buy discount tyres instead of overpriced main dealer items.

Also you say 2 year deals are hard to get, yet I have 587 of them listed on my website, so that claim that getting them "isn't easy" is rubbish.

The suggestion that you lose the full value of VAT when you buy a car (eg for cash) is rubbish. While VAT is charged on cars the value is amortised in the car, you would lose a similar proportion of value in depreciation (as you do now) if the cars were VAT-free. Another way to look at that is to use your argument to suggest that if there were no VAT the car in your example would only depreciate by 2.5% as you drive it away (clearly a nonsense). If you follow your VAT argument, no one would ever buy anything with VAT on it (again nonsense).

In reality, people lose the proportion of VAT on the depreciation. That is the true situation. On margin cars (where the VAT is absorbed, eg private sales) the VAT is an intrinsic part of the whole vehicle worth. It does not just evaporate, you would pass a reducing proportion on, hidden in secondhand value.

I do not allow customers to specify supplying dealers - otherwise I would have every retail car salesman and their dogs trying to offload their high-priced stock onto my customers. I get far better terms than 99% of retail customers can manage. No reason to buy from a local dealer anyway, I get cars delivered for free to anywhere within reason in Mainland UK. Warranty is the same wherever you buy.

So, all in all I question your advice.

What's your company called, ilovebanks? Don't be shy.

Ling


Come on 3 donkeys!

ilovebanksMCMLXXXI

Ling_Valentine wrote: »

Thanks gggggggggareth.

ilovebanks etc... why on earth do you think you will pay a higher rate from me? Have you read any of my 1,535 testimonial letters - there are errr 1,535 customers who would disagree with you there.

My business would simply not work if I was more expensive, actually due to my efficiencies and IT I need a lower margin to cover overheads and can be cheaper in most cases. I am a pure internet business. Not just a business with a website. Dealerships in particular have got massive retail overheads to cover. I would say just about every single broker in the UK has higher overheads than I do.

Ask people.

I would not advise full maintenance contracts because you can often do servicing much cheaper at non-franchised dealers on new cars (while keeping your full warranty in force). Who wants to pay main dealer servicing prices? Plus you can buy discount tyres instead of overpriced main dealer items.

Also you say 2 year deals are hard to get, yet I have 587 of them listed on my website, so that claim that getting them "isn't easy" is rubbish.

The suggestion that you lose the full value of VAT when you buy a car (eg for cash) is rubbish. While VAT is charged on cars the value is amortised in the car, you would lose a similar proportion of value in depreciation (as you do now) if the cars were VAT-free. Another way to look at that is to use your argument to suggest that if there were no VAT the car in your example would only depreciate by 2.5% as you drive it away (clearly a nonsense). If you follow your VAT argument, no one would ever buy anything with VAT on it (again nonsense).

In reality, people lose the proportion of VAT on the depreciation. That is the true situation. On margin cars (where the VAT is absorbed, eg private sales) the VAT is an intrinsic part of the whole vehicle worth. It does not just evaporate, you would pass a reducing proportion on, hidden in secondhand value.

I do not allow customers to specify supplying dealers - otherwise I would have every retail car salesman and their dogs trying to offload their high-priced stock onto my customers. I get far better terms than 99% of retail customers can manage. No reason to buy from a local dealer anyway, I get cars delivered for free to anywhere within reason in Mainland UK. Warranty is the same wherever you buy.

So, all in all I question your advice.

What's your company called, ilovebanks? Don't be shy.

Ling


Come on 3 donkeys!

You should have the whole of the UK leasing market sewn up then Ling - You don't agree with what I've said and vice versa.

If you buy a car, I can categorically guarantee that the minimum you will lose by registering it is the VAT.

If you buy a new car and then took it back a week later - or attempted to trade it - or webuyanycar.com - or any other means of getting rid of it the minimum you would lose is the VAT. I say 'VAT' because it refers to 17.5%.

You will lose a good 20%.

You are a broker Ling and if this person has a route direct to a funder then they will be cheaper than you because ultimately you add on £100, 200, 300 etc onto their base rate.

This person was going to purchase a car with a car allowance from his/her employer and I have suggested that PCH is better alternative, I stand by that and therefore he/she will be at least looking in your market sector - good news for you.

Also, you can have a maintenance package that doesn't include main dealer servicing. For instance, Lex use Nationwide Autocentres where they can and as for getting tyres done at main dealers? That doesn't happen very often because accounts are setup with Kwik-Fit, ATS etc and even include mobile fitting.

I was listening to the customer who wanted to obtain all the support and back-up from the dealer network. If he/she can nominate a dealer and ensure they get the service work then he/she will get the service/back-up they require - I have qualified the customer Ling!

I have worked in every aspect of the dealer network (aftersales/warranty/sales) and also at manufacturer level and whilst on paper it is true that a warranty is the same level regardless of where it is bought I can assure you that you get the little 'extras' if the dealer doing the servicing/repairs supplied the car. Things like loan cars, collection delivery etc are easier to come by if they supplied - customer service is high on the agenda for this person.

Cheap, cheap, cheap is not always best, especially for a owner/user.

2 year deals are easy to quote for but it's not easy to get a 2 year deal underwritten - especially PCH unless their credit is squeaky clean.

As for getting 2 year deals underwritten for Limited Companies that is not easy.

If you find it easy to underwrite two year deals then you are on to a winner and good luck to you.

I stand by my comments.

In any case Ling, I've always been a fan of your website so wasn't having a pop at you/your organisation. Competition is healthy and when all said and done, you are a broker - a very good one by all accounts but don't fluff it up.

Kind regards to all :j