Buy/lease a car?

MissMoneysaver_4

I have a company car but have to opt out of the scheme so will get a £400 p/m car allowance instead. (about £270 a month after tax). What are the pro's or leasing a car, if any, over buying? I don't want this to be costing me more than the £270 car allowance.

Thanks for any advice.

pvsol

Will you have to insure the car yourself for that sum? Will you be charging the company for your business mileage? What is your annual mileage?

MissMoneysaver_4

Yes, I will have to insure it, and will not charge mileage back to the company. I do about 15000 miles p/a

Thanks

pvsol

So you are probably looking to spend about £200 on the car and £70 a month on insurance. Try https://www.pvsol.net

mrcow

MissMoneysaver wrote:

Yes, I will have to insure it, and will not charge mileage back to the company. I do about 15000 miles p/a

Thanks

But you'll be able to claim tax back on business mileage...

40p/mile for the first 10000 miles
25p/mile thereafter

(Sorry - I know that this has nothing to do with buying vs leasing as you can claim this anyway, but you need to take it into account when comparing to how much the company car was costing you, so really you have more than £270p/m to budget with).

Pros of leasing a car are that you don't have to worry about servicing/wear and tear/breakdown cover etc as it's all usually included. Check what package you're being offered.

Mind you, if you're only going to be doing 15000 pa, then the servicing etc won't come to so much.

Pros of buying are that you will own the car at the end of the day (although many leases come with a reasonable purchase option at the end of the lease).

bethyblue612

Also bear in mind that if you lease the car, you will be paying money every month, but if you buy the car, once the loan is paid off in 3 years' time (say), then your car allowance will be "profit" until such time as you need to replace the car.

When working out how much you can afford to pay, have you allowed for the fact that you will be saving tax as you are no longer driving a company car?

fatboyonadiet

I'd buy, at least you will own the car then, rather than wasting money on a car you don't own