Car Allowance?? Best Way to Use it?

PasturesNew

If ever I had to go to client premises, I always parked my heap round the corner and walked.

Inactive

spiro wrote: »

For a lot of people the changes to income tax over the years around companies cars have made them worse off with a company car compared to a car allowance.

Fine if the individual can actually afford to buy the car in the first place, alas, the OP cannot.

What happens if she loses the job a couple of months down the line?

JQ.

Inactive wrote: »

Fine if the individual can actually afford to buy the car in the first place, alas, the OP cannot.

What happens if she loses the job a couple of months down the line?

The Employer is giving the employee £259pcm (net of tax) to buy and run a car. The employee already owns a car - which at a total guess probably costs £85pcm to run (tax, insurance, mot, servicing, breakdown cover, etc). So that's £344pcm to buy and run a car and the employee will be in exactly the same position they were before the job.

Honda Jazz 2006 1.2 with 30,000 miles for £3,800
Loan for 3 years at 12.9% is £126 pcm plus running costs of say £100pcm gives a total £226pcm (profit of £118pcm).

If the OP loses her job in 3 months time, she just sells the car and pays off the loan from the proceeds.

I would consider a Honda Jazz would be an acceptable car as it's looks have not dated, it's very reliable, they hold their value well and have generally not been abused by previous owners. Although their servicing costs are slightly higher because of the position of the engine.

I think the employer is being more than generous.

Inactive

JQ. wrote: »

If the OP loses her job in 3 months time, she just sells the car and pays off the loan from the proceeds.

.

If only it were that simple.;)

EllieA_3

Ok back from negotiations.

Ok suitable car is concidered to be something reliable and which looks respectable. He said anything in good condition and upto about 5 years old will be fine.

Tbh he seemed quite suprised that I would need to buy a car I guess he assumed i'd already have one meeting the criteria. I didn't see fit to explain my financial situation, 2 years ago i did have a suitable car but had to downgrade for financial reason's.

Petrol allowance is 14p per mile however I only get it for every mile above and beyond the distance bettween my home and the office.

That distance is 30miles each way, which tbh is quite a distance.. I didn't realise it was so far so thats quite abit of petrol right there.

So essentially i'll get it for any journey's beyond that, I know my first contract which i'll be placed at is just 14 miles from home and i'll be there for 3 months while they train me in thier procedures etc.

So for the first 3 months at least there is no petrol allowance and i'll be expected to cover the costs.

Right now the running costs of my banger to my current job is about £150 ish .. maybe abit more once you factor in that every MOT it needs the breaks doing.

I'm trying to do the maths. I suppose you could figure on £150 (current costs) + £275 allowance = £425 breaking even. But i have noticed the car insurance is a huge leap up as soon as i try and get anything decent.

JQ.

Inactive wrote: »

If only it were that simple.;)

It is. There is an entire marketplace dedicated to buying and selling cars - there are even dedicated websites that enable you to sell your car to a national audience. There's probably a car selling this very second.

Inactive

JQ. wrote: »

It is. There is an entire marketplace dedicated to buying and selling cars - there are even dedicated websites that enable you to sell your car to a national audience. There's probably a car selling this very second.

Very clever....:p

They are selling their cars for what they paid for them then?

LandyAndy

EllieA wrote: »

Petrol allowance is 14p per mile however I only get it for every mile above and beyond the distance bettween my home and the office.

That distance is 30miles each way, which tbh is quite a distance.. I didn't realise it was so far so thats quite abit of petrol right there.

So essentially i'll get it for any journey's beyond that, I know my first contract which i'll be placed at is just 14 miles from home and i'll be there for 3 months while they train me in thier procedures etc.

So for the first 3 months at least there is no petrol allowance and i'll be expected to cover the costs.

14p a mile sounds low but it is only to cover fuel costs as the employer is already providing an allowance to cover everything else. It works out at break even around 40 mpg.

Only paying it for distance over the normal journey to work is correct.

JQ.

OP - are you certain about the insurance costs ? - most of the cost is made up from Third Party cover, so there shouldn't be that much of a jump, although costs are on the increase.

Try some insurance comparison sites with cars like a Toyota Yaris 1.0l 2006 worth say £4,000, and the same with a Honda Jazz 1.2 2006 worth say £4,000. They should be reasonable on insurance, cheap to run and reliable.

If your current car is costing £150pcm then I think you could definately lease a car for 12 months with that kind of money - it's just whether you want the commitment. Buying a secondhand car with a loan would mean you could walk away far easier if the worst happened - it would also probably work out cheaper. To get proper 12 month lease quotes you will have to phone the brokers as 12 month leases are not completely standard.

Good luck.

JQ.

Inactive wrote: »

Very clever....:p

They are selling their cars for what they paid for them then?

Wow you really are doom and gloom.

3 months car ownership
Buy car £3,800 (Taxed, tested and serviced)
Receive Additional income £1,227
Loan arrangement fee £99
Loan payments £378
Capital repayment off loan say £100
3 months Insurance Cost £300 (inclusive of cancellation fees)
sell car for £3,300
Cost of sale adverts £100

Total cost of 3 months ownership to OP = £50