Car allowance - shall I finance a car?

Legacy_user

I receive £4K car allowance with my role and am currently driving an 07 Ford Focus with 130,000 miles on the clock, approx 30k a year on business miles. It’s going to need a fair few repairs soon and I’m starting to consider looking for a newer car.

I have some adverse credit so don’t think I’m able to go for a lease, but I have had finance accepted, not the lowest rate around, but I’m wondering if I should disregard that as it’s all being funded by car allowance? At the moment the allowance is just paid into my account with my wages as an additional extra/cover any repair costs etc.

I haven’t pursued the loan any further as I’m wondering if it’s the right thing to do? I’m worried about my current car conking out and would quite like something a bit more comfortable considering I spend 10 hours a day in it.

I don’t have much in terms of cash to put down having looked into PCP deals, but I don’t think I’d get accepted anyway.

Any advice greatly appreciated.

Phil&Michelle

Personally on 30k miles per year I would think the maintenance fees will be very high. Maybe you would be better buying something a year or so old and run in into the ground for a few years?

System

Yes I’ve been looking at 14/15 plate Fords with low mileage, not brand new. I’ve only ever had company cars with previous roles so am totally unawares what other people do in this situation. Some of my colleagues took out PCP deals, some drive old cars, some have bought brand new for cash and now have really high mileage. It seems we are disadvantaged any which way!

forgotmyname

Disadvantaged?

Spend £8k on a car with under 30k miles, run it for 3 years and you should have a profit from your £4k a year.

Look after your current car it wont conk out.

System

Thanks for your replies. Not sure how I’d make profit though? The £4K is taxable and as it’ll be financed I’ll be paying interest also. Sorry I’m no good with numbers *shakes head*

forgotmyname

Because in 3 years you will have received £12k minus the tax and only spent £8k on a car..

If its finance then you get something older and much cheaper.

Just an example and probably not the car you want, but the figures make sense.

You can get a sub 5 year old KA with low mileage for under £4k. So in less than 2 years you should be able to pay it off in full and the 3rd year the £4k is all yours to save towards your next car.
End of year 3 it will have approx 120k miles on it and you will get £1500+ for it also. SO £4k - tax + £1500 deposit towards the next car?

OK its a KA, but i quite like driving it. No issues thrashing it up and down the motorway daily.

Cheap to service also. Just had the full works on it and it came to less than £400.

System

Ok that makes sense. Thanks for explaining. I have two small children so unfortunately I don’t think a KA will cut it �� but I see the point you’re getting at. I drove a KA as my first car, really loved it! Although the steering wheel used to shake with terror at 70mph+ haha. I’m sure they’re much more robust these days.

onomatopoeia99

A Ka should be stable and shake free at 70mph, there was something wrong with yours! Anything made in the last couple of decades (or indeed longer than that) should be absolutely fine at motorway speeds unless it's broken in some way.

If you get £4k/year to do 30,000 miles that's barely going to cover your fuel though, unless that is refunded separately.

System

My mileage is reimbursed separately, so I don’t need to worry about that. As long as the car isn’t drinking fuel then I usually make a small profit each week. Although this is a 1.6 petrol, I’m sure a diesel would be more economical.

Nobbie1967

MissSJL wrote: »

I receive £4K car allowance with my role and am currently driving an 07 Ford Focus with 130,000 miles on the clock, approx 30k a year on business miles. It’s going to need a fair few repairs soon and I’m starting to consider looking for a newer car.

I have some adverse credit so don’t think I’m able to go for a lease, but I have had finance accepted, not the lowest rate around, but I’m wondering if I should disregard that as it’s all being funded by car allowance? At the moment the allowance is just paid into my account with my wages as an additional extra/cover any repair costs etc.

I haven’t pursued the loan any further as I’m wondering if it’s the right thing to do? I’m worried about my current car conking out and would quite like something a bit more comfortable considering I spend 10 hours a day in it.

I don’t have much in terms of cash to put down having looked into PCP deals, but I don’t think I’d get accepted anyway.

Any advice greatly appreciated.

When you say "it'll need a fair few repairs soon", what sort of stuff are you talking about? If you can keep it going for another year, that's probably about £3k after tax that you could save towards a deposit on a newer car minus the cost of any repairs. Would put you in a much better position.

macman

If you are doing 30K a year, a diesel is a no-brainer in terms of fuel consumption.