Lease or Buy?

MaryJo

I'm about to start getting a company car allowance and I'd like to get an Audi TT Coupe 2.0 TSFI Sport.

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Income
Car allowance: £4400 per year (£5500 before tax)
Mileage allowance: £4500 per year (10,000 miles per year at £0.45 per mile)
= £8900 per year

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Costs
Insurance: £1700 per year
Road tax: £165 per year
Petrol: £1478.75 per year (10,000 miles @ 40mpg = 250 gallons of petrol @ £5.915 per gallon (£1.30 per litre))
= £3343.75 per year

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This leaves me with £5556.25 per year to pay for the actual car.

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Leasing Cost
I can do a 3 year lease from here for [STRIKE]£343.95[/STRIKE] £412.72 per month = [STRIKE]£4127.40[/STRIKE] £4952.64 per year.
Net expenditure for 3 years is [STRIKE]£12382.20 [/STRIKE]£14857.92.

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Purchase (Loan) Cost
Alternatively, I could borrow the full cost of the car (£27140) and repay over 3 years @ £850 per month = £10200 per year. I could then sell the car after 3 years for approximately £17000.
Net expenditure for 3 years is £13600.

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[STRIKE]So the car works out at £405.93 per year more than leasing plus I need to commit capital (which could be invested elsewhere). Am I missing any benefit to buying rather than leasing?[/STRIKE]

So the car works out at £419.30 more per year if I lease rather than buying.

sheslookinhot

Have you considered the vat at £70/month

flyingscotno1

MaryJo wrote: »

. Am I missing any benefit to buying rather than leasing?

If you lease they inspect the car on return and if you have a few scrapes and knocks on alloys/wings you'll get charged for it. If someone clips the mirror and breaks it you have a large bill!

If you personally lease a car for 3 years and for whatever reason there is a change in circumstances or jobs you have to continue with it or pay a settlement. With a car that you own you can always cut losses and sell it.

rodenal

Some of your calcs dont add up:

54mpg from a TFSI with what, 200ishbhp? No chance, you'll be looking at more like 30-35mpg or 40 if you never hit the loud pedal.

Take a mid point of 35mpg @ £1.30 / l = £5.91 a gallon = £0.169 per mile x 10,000 = £1,690

plus £1700 (really!?) insurance and £165 tax

£3,555 - unless you're looking at the tdi?

It also looks like you're missing off the vat from the monthly cost?

Take into account at least 2 sets of front tyres over your 3 years and 3 services.

As of whether to lease or buy, how secure is your job? If you consider yourself safe as houses then lease the car, you'll get nothing back at the end of the 3 years but you will get a relatively hassle free, new car after this and its a car allowance anyway, I know if I had of picked an allowance instead of company car I needed to have a car under 4 years old.

If there is a chance you'll lose your job over the next couple of years then purchase the car and put as large a deposit as you can down on it so that if the worst happens you can pay off what you owe (or at least the majority of) by selling the car

LandyAndy

You've calculated the allowance as £4400 (£5500 gross increase in salary less 20% tax, I presume) but should you also consider the additional NI contributions you will pay on the salary increase and possibly the 40% tax if the salary increase takes you over the threshold for higher rate tax?

MaryJo

Thanks for your replies.

• You're right - I had forgotten to include the 20% VAT in the leasing cost: I've updated my figures accordingly
• RE: £1700 insurance: Yeah, I know it's steep - the problem is that I'm only 25 and this will be my first car so 0 years of no claims bonus.
• The 54.3mpg is the quoted (extra urban) figure from Audi's website. I've been happy to use this figure because all of my company miles will be long distance motorway driving. From what I've read elsewhere, the 54.3mpg figure is fairly accurate. I may consider the 2.0TDI which has 65.7mpg (extra urban).
• Good point about the cost of servicing and tyres - I will investigate how much these items will cost and update my figures.

I think you make excellent points about the change of job circumstances. My job is very secure but I do like the idea of covering myself even if something does happen. This combined with the potential hidden costs involved in leasing is make me side more with purchasing rather than leasing.

rodenal

Ok, there is no way you will achieve 50+mpg from a 2 litre tsi engine - even if the website claims it, it's simply not going to happen. A golf Gti will hit mid 30's to 40mpg on motorway with much the same engine.

Another observation, and it is only an observation is that you appear to be outstretching yourself for what isn't a particularly fantastic allowance. When I done the sums a £5k car allowance wouldn't have bought and run anything like the car you seem to want - I could have gotten a very high spec golf / A3 had I wanted one, or a reasonable mondeo/insignia etc. I seem to recall being able to afford around £300pm including the VAT on the lease when everything else was taken into account. I was paying a bit less than half your insurance amount too.

There is a 1.8 TT coming out, maybe look into that but in all honesty it seems like you need to re-align your expectations.

spiro

You need to check the mileage rate you company pays as most will class you as a 'cash alternative user' and this normally means a lower rate of around 18-20p per mile, this would more than halve your fuel income. I dont know if you can claim the tax back on the difference between 20p and 45p but this would only be 5p per mile (at 20%).

With leasing lots of lease figures are based on 10k pa, I guess you will be doing more if you are doing 10k in business mileage, have you account for higher mileage?

Also get yourself a copy of http://www.bvrla.co.uk/Advice_and_Guidance/Fair_wear_and_tear_standards.aspx which will detail what is accept and what is not.

poppasmurf_bewdley

You're always better off buying than leasing. At the very least, the car is yours at the end of the day.

Same reasons why no one rents TV's these days.