Company Car or opt out?

BWA_2

Hi all,

Googled this subject and didn't find much that fitted my circumstances and it's always interesting to hear other people's experiences anyway, so I figured I'd throw my own query out there.

I've had a company car for about 7 years now and it's been pretty good. Hassle free motoring for the most part. My job has changed slightly recently and my mileage reduced, and whilst I still have a fuel card, I no longer have the benefit of personal mileage being included - it's now business miles only.

So now I have the option to opt out and am offered £385 per month (BEFORE PAYE). It's not a huge amount of money (and maths isn't my strong point) but I figure if I buy a used new shape Focus with 10K on the clock for about £11K, I can probably have it paid off in under 3 years and running costs should be fairly minimal as it's a ubiquitous Ford. After that I figure I'll still be getting paid for it, but running costs aside, the car will be mine.

Just wondering if anyone on here has done anything similar and how it's worked out for them?

+++ Also (and this one may be for another area of the forum!) looking at a mortgage too though soon. It wouldn't effect my deposit, but If I were to take finance out instead of buying outright, would it have a negative effect on any mortgage offer?

Be really interested to hear people's opinions/experiences.

Thanks.

forgotmyname

Tried some insurance quotes? With zero no claims your looking at a few £ for the 1st few years.

Having a car loan will affect the mortgage but you will be on more money which should be a bonus. As long as the car you buy and insurance etc does actually cost less than the increase in wages.

With insurance and servicing costs a £11,000 car maybe rather borderline.

gingerdad

You should be able to get full Ncb as long as employer can provide you with proof on no accidents company car etc.

If no personal miles you should be paying any fuel premium.

JQ.

forgotmyname wrote: »

Tried some insurance quotes? With zero no claims your looking at a few £ for the 1st few years.

That's not the case. I opted out and lots of insurance companies offered equivalent discounts to a full NCD, Direct Line ended up being the cheapest. A letter from the fleet manager was all that was needed.

Lum

Really it's a balance of cost vs hassle. If your car breaks down and you can't get to a job that's now your fault for not providing a suitable car.

Don't forget all the other costs that are free with a company car, tyres, brakes, servicing, breakdown cover etc. etc. it can quickly add up.

While that money is before PAYE (so deduct 20% or 40% depending on your tax bracket) you also need to work out how much you're currently paying in company car tax.

For me it works out better to keep the company car as literally the only thing I have to pay for on it is diesel.

JQ.

Lum wrote: »

For me it works out better to keep the company car as literally the only thing I have to pay for on it is diesel.

and pay the company car tax.

Lum

I was referring to usage costs, not ownership costs.

Well not ownership, but you know what I mean.

ian103

I think post 5 really sums it up, company car is ultimately someone elses problem, all repairs covered and a new car every so often. Only real problem is you can't normally have exactly the car you want.

BWA_2

Thanks for all your responses.

Looking into it further:
I would save about £800 in car tax per year, which should cover my insurance. With PAYE taken into account, I've got £308 to spend per month. If I look at a deal for around £250 per month, then that will leave £50 that I can put aside cumulatively to deal with servicing, etc, and as it's a nearly new car, I wouldn't expect to have too many major issues aside from tyres and standard servicing. I also like the idea of either flogging the car at the end or using it to help fund another car and recouping further money back.

I guess I'm just thinking it would be nice to actually own the car, as I have had company cars for 7 years now and I could have bought and paid for one by now. (It's like renting, as opposed to owning a house which I've also done for too long!) I suppose we don't know what the future holds. If something were to happen with my job at least the car would still be mine. But on the flip side I am inveterately lazy and the company car does save hassle.

Anyway, I have to make a decision by the end of next week, so I'll let you know what I go with.

Hintza

You say "the car will be mine" remember a car is a depreciating asset, so don't get too excited about owning a 4-5 year old focus in a few years.

Lum

Houses don't generally devalue to a fraction of their purchase price in a matter of years.

Unless you're driving a classic or a banger, you are going to be paying constantly in depreciation, like renting, if you own a car. Only real exception to this is if you plan to modify the car.