Pcp Vs. Lease Vs. Buy

[Stu 18]

hi all,

 

I'll hopefully be moving jobs soon to one with a car allowance, and am looking at options car wise.

 

Im currently favouring something maybe a year old, and getting a PCP deal, though the lease hire option is tempting...

 

Just looking for tips on what you guys have done, how you came to decide on the deal you got etc?

[GilesW 41]

Some advice having done this for years:

 

First off you need to understand your job, ie if you'll be doing a million miles a year.

Then how much you can cliam for each mile (fuel rate).

Then also how much private milage you'll do.

 

Also your job may have a prescribed type of vehicle you can have - even though you are purchasing with your car allowance.

 

This will then let you understand how each option will work for you financially, and then you can temper this with what you WANT to have, and what you may need to pay/put up with to have it.

 

Let's put the above in context:

Most lease hire etc schemes shout about a low payment, but then it only is relevant for 10k miles a year (will you do more), and you tax, insure and pay all maintenance costs.

These can seriously add up, and the over mileage penalty can be huge.

So this could fundamentally effect your choice.

 

I chose a company car against an allowance due to the miles I do (I note you don't say if you have that option), and also I have to keep my 205 going and my Mrs car. So with a company car if it breaks I get another delivered in an hour.

 

 

Hope that helps.

[McDude 33]

The only way to decide is with a calculator (personally I love a good Excel sheet). They are all different names for borrowing money, which I assume you'd have to do if you bought outright.

 

Do the sums and see which works out best becuase it really depends who is offering what and over what timescale; e.g. uping your mortgage is potentially a cheap way to money, but only if you pay it back quickly, leave it for 25 years and a small amount takes a long time to pay back/costs a lot. Manufacturer finance can be a total giveaway but only if they are trying to shift cars.

 

Consider if you want to own the car at the end or give it back after a few years.

[GilesW 41]

Depreciation can kill what looks like a good purchase deal too. So make sure you factor that in.

[rallyeash 155]

If going down a lease hire route make sure you fully understand what your getting into. On the surface they can look very attractive. But when say Lex Autolease hit you with a whooping return conditions bill on all sorts it'll kick you in the teeth.

 

Remember lease conpanies are businesses. They want to write the car down to as little as possible on their books, keep the mileage down (hefty fine can be applied) and they will try to hold off doing service work until late in the contract/right at the end. An ex lease car is worth more to sell with new brakes, tyres etc etc, also they run high residual values on them which is great for low monthly rentals but said lease company still want to see a profit on the back end of the deal.

 

 

You can do it very effectively but it's a personal risk. I believe personally if you can have a company car through work it's less risk and straight forward.

My Isuzu DMax is a company car, it broke down last week with fuel leaking into the sump. It's still in warranty although if it wasn't it would be on the company account, not my bank account.

 

I work in the agricultural sector, however spend lots of time working out and doing lease purchase/contract hire/hire purchase etc so know the downsides to all!

[GLPoomobile 958]

I take a cash allowance.

 

For my grade in my company, I get a cash allowance of £200 a month (it was £250 on the older scheme), which isn't spectacular I suppose, but then it's not the type of role that demands a big flash car (and my company is quite Jewish in it's approach to managing finances). I forget what this translates to in terms of the allowance for a vehicle, but quite simply, from the vehicles available (through Lex Autolease) there's very little I could actually get within my allowance, and certainly nothing at all I'd have any desire to "own". We're talking stuff like boggo spec diesel Fiestas etc. Our scheme no longer allows petrol vehicles, and the choice has been drastically eroded in the last 3 years, losing brands such as Alfa, Citroen, Pug, Renault. So basically, if I wanted to take a car instead of cash, I'd personally feel compelled to take something that would require additional contribution from my own pocket. When I looked in to it about 2 years ago, I was looking at an extra £80-£130 per month of my own money to have anything tempting.

 

The thing with me though, is that I don't currently do a lot of mileage, and don't get to claim back my mileage on expenses. I can only claim mileage if I'm travelling to a customer site. But I'm now working on projects that don't require me to be site based, and I either work from home or at the office 3.5 miles away. So I worked out that if I took a car, I'd effectively be losing ~£300 per month. That means I'm spending £3600 per year on a car. Taking the cash, and running older cars, I don't spend anywhere near that amount per year! It does however mean that I carry the risk that if a big bill comes along, I could in theory end up spending more. I like the idea of taking a company car, for the convenience and comfort of having something nice and new, with everything taken care for me, but for me it just doesn't work out financially.

 

As said above, you really need to do some cold hard sums and think very carefully about your own circumstances and see how it all works out for you.

 

Oh, and also, do you even need to buy a car with the cash allowance? In my work, I was based in London when I started getting a car allowance, and the whole time I was commuting via bus and tube, whilst my car (the 205) sat on the street and was rarely even running! It was a perk of the job but not conditional that I must spend the money on a car. The only condition was (and still is) that if you submit a mileage claim, the car it's submitted against meets the company criteria (legal, MOT'd and insured for business use, and fit for purpose). My car allowance has paid for many things other than a car over the years.

[Stu 18]

Thanks for all the comments guys, it seems i need to do some real thinking on it

 

My gut feeling is the allowance will be circa £300 per month, which isnt a great deal at all in the lease/buying world, and i'm not entirely sure if i *have* to use it towards a car.

 

Currently i work 4miles from my office, and will ocassionally have to visit head office in coventry (we're talking maybe 1-2 times a week, every other week max) so we're not talking mega mileage at all.

 

I can claim my miles to head office anyway through the standard scheme so thats no issue.

 

The more i think about it the more i think im gonna keep running my 306 DT till it dies, and pocket the cash. My mortgage deal is up in 3 years so if i bank the allowance till then its a decent chunk off that, or if anything happens with the 306 ive got some money in the bank to buy a replacement relatively quickly.

[GLPoomobile 958]

Deffo sounds the most sensible approach if you can do that.

[mowflow 67]

Pity those cheap golf R deals have just ended. Think they were about £270pm.