What to chose - Company Car or Allowance?

yessuz

Hi.

Well, basically - here's the question:

I was offered a Manager position in the company I work for at the moment, and this position offers salary increase (of course) and company car or car allowance to choose from.

At the moment I drive 10 year old car with 100k miles on the clock which needs some investment. In addition it is 260/year tax.

I drive about 10K miles a year and commute short distances, like 20 miles/day

I would go for the newer car which I would have to pay off in few years, which would cost about 7.000 Pounds OR I could take company car which would be renewed every 3 years. I would be taxed of course... In both cases, I would be paid 0.15£/mile if needed to travel for work purposes. I would not have any additional fuel allowances.

Now - what is more viable to choose in my case?
I do realize, that I would have some equity after I paid off my car, and probably the best is - to opt in for the allowance and bank money, and drive my old car. But as I said - it requires serious maintenance (in order of 500£) and I do not think it is a very viable option, however it would be around 1000 £ as Part Exchange while buying another car, or 1500 as private sale...


so - please - any advise is needed!
thanks!

tizerbelle

You may have done this but because you don't specifically say so its worth double checking - are there any conditions linked to the car allowance i.e. you have to drive a car that is under 5 / 8 years old?

yessuz

Yes, condition is that car must be under 8 years

getmore4less

Any other conditions, like no. of doors/seats.

Age means keeping you current car is not an option.

Do the numbers.

salary
allowance
which company cars are on the lost.

work out how much a month net you have to run a car before fuel.

What sort of vehicle would you like to drive(what's the current car) is there one on the list.

yessuz

Thanks!


Currently I own 06 reg Mazda 6 estate. I am looking for similar size and type car, automatic only (my preference).

Mazda is 260/year road tax. When I put in all maintenance, insurance, tyres etc - it costs me more than 1000 £ / year alone.

I am doing about 10 000 a year.

So probably it would be wiser to buy another car, 5 years old or so and to use allowance to offset the costs of maintenance and such...

Acc72

To be honest, I have done the calculations several times myself - however at the end of the day it basically comes down to personal choice.


Just like buying a car - you can choose to buy one for £500 or one for £5,000 etc.


In your circumstances it will be more costly to you financially to have a brand new company car as opposed to a second hand car that you have purchased yourself - the decision is whether you think that the premium cost is worth it.


Many people think that a company car is "free" - however you need to factor in the taxable benefit of the company car and also the opportunity cost of the loss of income (i.e. not being paid a car allowance) after tax.


You will however save money on having no insurance costs, or maintenance costs / servicing etc. - not to mention no depreciation or interest to pay if you were to borrow money to purchase a car.

yessuz

Yes, that's exactly my thoughts.
Well, it's time to do some maths, huh

getmore4less

Probably worth looking around for an ex lease with loads of miles around 3 years old, that will give 5 years before another change.

Going older just means a forced change sooner.

yessuz

Yes. Saw available: 2012 reg, 120k miles on the clock, for ~7000 pounds.

Exfleet car

dawyldthing

After the caffuffle of someone on here with a hire car Id say drive your own and have the mileage as the other problem is if they have mileage limits