Car buying options - can't decide

sw_jay

My partner’s boss has decided to give her a monthly car allowance of around £300 after tax (but this would also have to cover running costs, except fuel) instead of paying an extortionate amount on hire vehicles.

We are really struggling to decide what is the best option to take.

My partner would prefer a new or nearly new used car so that it is more reliable. She does around 15k miles per annum.

She feels getting a new car on personal lease would be better but I believe this is wasted money as we will have to hand the car back at the end of the term and she will be liable for any cosmetic damage caused during that time.

I feel that a better option might be to buy a used car (2 or 3 years old) on finance and use the monthly car allowance to pay it off that way. Then at the end of the contract the car will be hers and she can either keep it or trade it in as a deposit on a newer car.

Any thoughts as to which might be the better option? We also need to bear in mind that we are applying for a new mortgage so would need to consider the impact any credit agreement might have on this.

Thanks, Jason

rodenal

sw_jay wrote: »

My partner’s boss has decided to give her a monthly car allowance of around £300 after tax (but this would also have to cover running costs, except fuel) instead of paying an extortionate amount on hire vehicles.

What kind of car are you thinking about getting ? £300 including running costs will not go a long way unless you're looking at the likes of the C1 etc

Random example

Small (i.e fiesta) sized car, 15k per annum lease on a 2 year deal will typically be somewhere between £200 and £230 per month - £2760

Insurance at least £300 - £3060

Servicing at least once a year say £150 - £3210

Possibly 2 tyres a year £150 (gueestimate) - £3360

road tax probably very little maybe £30 a year - £3390

Not sure how they plan to cover the fuel but I'm assuming that's not a factor. If it's declared though you should account for the taxable deduction from fuel benefit.

What route you go down r.e pcp/pch or hp depends really on how secure you feel the job is - if it's very likely nothing will happen for the next 2-3 years then I'd be tempted to go down the pcp/pch route as that will give your wife the newer car she wants. You will easily be able to calculate the exact amount (apart from damages) that the car will cost over the term and ensure the allowance is enough.

If you feel there is any chance of the job disappearing in the next couple of years though then I would only look at an outright purchase or HP with a decent deposit.

sw_jay

She would love something quite sporty or a cabriolet. Although probably not the most appropriate thing to buy, I think she sees it as a good opportunity to drive a nice car that she could not normally afford.

Her job is very secure, well as secure as it can be in the current climate so that shouldn't be a problem.

Personally I don't think she'd be able to find the sort of car she wants on personal lease with her allowance unless she's willing to put some of her own money towards it.

That's why I thought it might be a better option to get a used car on finance as she will then be able to afford something she likes.

rodenal

If £300 per month really needs to fund the car and maintenance / servicing etc then there is no chance of getting any kind of sporty or sporty looking car.

£300 may just about cover the base lease cost of some kind of small / medium drop top but wont touch anything else. Really depends how much of your own cash that you're willing to put in and what kind of car she is actually thinking about.

*edit* actually you can get some pretty good deals on the 1.8 mx-5, could be worth looking at. No real performance to speak of but a roof that comes down, looks good and great to chuck around

Nothing wrong with purchasing used but to be honest whenever I've used a car for work it's just felt like I was putting alot of extra wear and tear onto something that was mine for no return (even including allowances etc). For work use a car that you know isn't yours (leas/pcp) or alternatively a dirt cheap runner is a better prospect...imo

getmore4less

Whats she driving now?

One option is to go cheap for a year to build up a bit of savings then go for the more ideal one.

Modern cars well looked after are generaly reliable if chosen correctly

Depreciation is the biggest hit so go a bit older

A 2-3 year plan to own outright and cover costs would be my goal.

£300*36 is £10800, £5-£6k car, good recovery, £1500py for standing costs tax insurance mot, mileage allowance should cover the fuel.

Use the trade in after 3 years to go up a model.

Or the other option is bangernomics, and just change more often, never have to mot service if chosen correctly

sw_jay

Thanks for the advice guys.

She's been driving a hire Seat Leon for the last year or so and had a company Mini Cooper before that. The boss is fed up paying £450 a month for a hire car so has suggested that he gives her that amount towards her own car instead as a thankyou for her hard work.

To buy a new lease VW Golf cab or similar seems rather expensive unless she puts some money towards it herself. We don't really want to have any extra expense at the moment because we are looking to buy a new house so I don't think that's an option unless she gets something basic.

Looking at the used car market, she could buy something like an older VW Golf cabriolet or a 2/3 year old VW Eos cabriolet for 8 or 9k. I'm sure something like this would be fairly reliable and if she paid this off over 3 years it would still be valued at enough to give her a decent deposit on a newer model.

She doesn't pay fuel so this is one less expense. Obviously we will need to factor in the other costs as you have mentioned.

getmore4less

Is a softtop the way to go, this car if for all year.

Does she have to have the 4 seats?
MX5 with a hard top like the other thread

If she wants something sporty an Octavia VRS a few good ones around at £5kish, petrols not an issue if someone else is filling the tank.
VW part with a different badge.

how much kit/passengers does she need to carry

thegirlintheattic

I second the octavia VRS - not the best sporty look on the outside but it doesn't half go!

We have a diesel one which is very fun to drive - I'd imaging it would be even between in a petrol. You also have the bonus it's a full sized car with a massive boot space.

Strider590

sw_jay wrote: »

My partner would prefer a new or nearly new used car so that it is more reliable.

You only need read a few motoring forums to realise that this is a fallacy.
Dealing with "teething problems" can leave owners in a position where their car spends more time with the incompetent dealership "mechanics", than it spends on their drive.

The problem being that your stuck taking it to a dealership, where a decent independent mechanic might be able to diagnose the problem just by listening to the exhaust note.

New cars go wrong more than 2 or 3 year old cars do....... In fact as my 2004 Vectra has now gone 24 months without a single problem, i'd say that makes it (on average) more reliable than a new car.

Plenty of the regular posters here, have older cars.

sw_jay

Strider590 wrote: »

New cars go wrong more than 2 or 3 year old cars do....... In fact as my 2004 Vectra has now gone 24 months without a single problem, i'd say that makes it (on average) more reliable than a new car.

You're absolutely right. My 2001 VW Golf TDI has needed next to no work, apart from the usual servicing, tyres etc since I bought it 5 years ago.

I'm definitely now thinking used is the way to go.

Now just to decide what to buy!

BillTrac

Don't forget business use insurance as well.

I get a car allowance of £500 pm and I have bought my last two cars nearly new. ie less than a year old. The one I have now came with over two years manufacturer warranty left.