Company car

foxall1982

I have to pay an additional £89/mth towards my company car. If I hand my notice in, I am liable to pay the £89 for the remainder of the lease period. So currently that would be £3204. I have signed an agreement for this, but am wondering if there is a way out of paying it?

Grumpy_chap

foxall1982 said:

I have to pay an additional £89/mth towards my company car. If I hand my notice in, I am liable to pay the £89 for the remainder of the lease period. So currently that would be £3204. I have signed an agreement for this, but am wondering if there is a way out of paying it?

You would have to look at the detail of the company car rules and the agreement you signed for anyone to make an assessment about ways out of paying the £3,204 plus a bit more context?

Extrapolating from what you have said in your post, I assume:

1. You are provided with a company car.
2. You were permitted to upgrade to a more expensive company car in return for agreeing to pay the extra lease costs for the whole term of the car being available.  This is £89/month.
3. You have £3,204 of £89 payments remaining, so 36 months.
4. What was the original lease term?  4 years?
5. You now plan to hand your notice in so will become exposed to the extra monthly payments landing as a lump sum.

Is that correct?
If so, I suspect that the scope to avoid the monthly charge for the remainder of the initial lease term is very limited.  It is not fair on the company that they need to pick up this cost and the company cannot really pass this on to whoever they transfer the car to (as that new employee won't want to suffer the £89 per month either).

Veteransaver

You'd need to read the details of the agreement. It would seem odd though to pay for something you no longer have use of though as you'd have to hand the car back when you leave.
I know our salary sacrifice scheme you just walk away from if you resign, regardless of whether you've paid for optional extras on the lease.
Can you potentially buy the car, and then sell it on if necessary, might be cheaper.

Hoenir

Veteransaver said:

 It would seem odd though to pay for something you no longer have use of though as you'd have to hand the car back when you leave.

If the employee has decided to upgrade the benefit at their expense. Then wouldn't be unreasonable for their to be a claw back provision. As there's no certainty another employee will be happy to suffer the financial burden. 

Bue21

It will specify the penalty, if any, in your contract. I have been ‘stung’ twice over my working life both times the penalty was 6 months contributions (I left one employer part way through the contract and terminated my lease early with another following a reduction in hours so couldn’t afford it!). In my situation the cars were part of a recruitment/retention package so penalties were unavoidable.

Marcon

foxall1982 said:

I have to pay an additional £89/mth towards my company car. If I hand my notice in, I am liable to pay the £89 for the remainder of the lease period. So currently that would be £3204. I have signed an agreement for this, but am wondering if there is a way out of paying it?

Read the exact wording of whatever agreement you signed with your employer. Then check with them exactly what penalty they'd suffer in respect of their leasing agreement with the leasing company.

Exodi

Veteransaver said:

You'd need to read the details of the agreement. It would seem odd though to pay for something you no longer have use of though as you'd have to hand the car back when you leave.
I know our salary sacrifice scheme you just walk away from if you resign, regardless of whether you've paid for optional extras on the lease.
Can you potentially buy the car, and then sell it on if necessary, might be cheaper.

I disagree.

We also operate a salary sacrifice scheme, where employees are given a 'budget' for a contract hire vehicle. This is commonplace (or employees are provided a catalogue of options).

If I suggested I reallyyyyyyyy wanted an Audi A8 as my company car, the company might reasonably suggest they'd be agreeable if I paid the difference from their max budget.

If I agreed then left the company (the OP mentions handing their notice in, not being made redundant) relatively soon after (which sounds like the case, as the typical contract hire is 36 months, or 48 months), then it's totally reasonable for the employer to want the difference for the life of the lease. They can hardly charge the new employee it, nor should they pay an expensive lease on a vehicle they didn't even pick.

Regarding buying the car, if it is indeed a business contract hire vehicle as I expect, purchase is usually not possible.

DullGreyGuy

Veteransaver said:

You'd need to read the details of the agreement. It would seem odd though to pay for something you no longer have use of though as you'd have to hand the car back when you leave.

You'll find there are many things in life where you have to still pay for things you've taken on credit even if you no longer have the object. A family member bought an expensive engagement ring on credit, when her infidelity came to light her fiancée threw the ring off Brighton Pier. She's got another 2 years or so of paying for the credit left for the ring at the bottom of the sea. 

It's not uncommon for contracts and agreements to include terms that you need to repay certain elements if you leave within a certain period. This can be non-compulsory training, enhanced company cars, loans for season tickets etc