Windfall - pay off debt or buy car?

Debtfree2018_2

Morning all

Hope you enjoyed the extra hour in bed.

I would be grateful for your advice.

I get £350 per month car allowance, I usually lease a car, which works out £370 per month all in. However I do go over the allocated mileage and have to pay a fine.

I will have some money available to me and when I have to give back my car I am wondering shall I buy a car (windfall plus savings) and take the risk if things go wrong or continue leasing, smaller car and put the windfall/money towards debt???

The answer seems buy a car and put the £350 towards extra debt payments.

Any advice would be much appreciated.

Thank you

kerri_gt

To clarify - you get paid a £350 car allowance whatever?

It would help if you actually listed out your debts (incl APR) as well as the money you have to play with and what you are thinking of putting towards are car.

It sounds like a car in some form is essential to your work - is this because of distance from your workplace, or the type of job you do?

Could you split the money, put some towards a car and the rest to debt repayments? without specifics, it's difficult to advise.

[Deleted User]

Who pays the maintenance, insurance, VED etc., on the lease car?

Who would pay them, on a car you owned?

Debtfree2018_2

I need the car because of where I live and the role I do.

£350 is definite

In both cases I pay insurance.

On the lease, I don't pay for anything else, if a tyre bursts I don't have pay.

If I buy my own car, I have to cover everything.

[Deleted User]

So, by leasing, you avoid road tax, servicing, repairs, etc.

In your position, I'd put the windfall toward the debts, and continue leasing.

ghostmadlittlemiss

How much petrol are you using each month? And is that included in the lease as well?
Kayleigh

Debtfree2018_2

About £120 pm no not included in either option

ghostmadlittlemiss

In that case, I'd definitely go for buy a car over leasing one as I highly doubt that your road tax, repairs and servicing would add up to £4,440 a year, which is what you're paying for the lease (excluding those fines you mentioned as I don't know how much they are). So what I'd do personally is to buy the car, use the money you're saving each month to build up a good emergency fund for car repairs and then throw the extra money at your debts.

Also, the AA do a breakdown cover that pays for parts and garage costs of up to £500 up to 5 times a year, which if you're worried about your car being costly to repair is a great peace of mind. I used it with a Morris Minor a few years ago and definitely got my money's worth! :rotfl: It doesn't cover everything though so do have a good emergency fund just in case though or any repairs will just increase your debts.
Kayleigh

Debtfree2018_2

Hi Kayleigh

Super useful, thanks so much!

Debtfree2018_2

Thanks so much everyone all v useful advice!

Takeaway_Addict

Agree with the above, one thing to add though is that if you can not get access to credit then build a contingency fund for any issues that might arise.