How To Acquire A Newer Car?

[Monster]

Ok, long story short I've just got a new job and as part of my salary I get a £5,300 car allowance as long as I drive a car within the rules. My current, and much loved Leon Cupra R, is now 9 years old and the policy only allows up to 6 years old. The policy also states "4-doors" which is weird as I always think 3 or 5 is the normal way to think about the doors.

Basically I want something at least as powerful as my LCR but preferably more, so circa 265+ bhp generally. My mileage for the next 3 years will be low - circa £10k/year. Cars I've generally looked at are Audi S3, BMW 330i/d, Golf R.

I'm a little stuck though. I did some calculations and taking into account buying the Audi 3-4 years old, circa £20k depreciation over 3 years works out about £3k per year. Add tyres, servicing, tax, mot, insurance and such and its say £4.5k/year.

The lease deals on these sort of cars seem to be working out including all the above more like £5.2k/year ish so £700 difference. However, this includes servicing and they have the risk and I get a new car and don't have to find £20k cash (I can but I'd rather not!).

What would you do in my situation in terms of acquiring one of the above cars, £20k to buy and own it, do a lease, is there another idea?

Thanks for any help in advance!

 

[p0ss3s3d]

Don't forget that the car allowance is taxed/NI so could only actually be roughly £3.1k if you pay 40% tax and £4.2k if you pay 20% and somewhere in between if that £5,300 tips the balance.

It all depends on how much you want to dip into your salary to run the car. On £3.1k a year you won't be able to run a poverty spec 1 series let alone a 330!

 

[rodenal]

It will almost always work out more expensive than buying a couple of years old, but PcP is a viable alternative to leasing when it's not being covered by the company (directly). At least then should something go wrong with your job or you just want a different car during the term you'll have the option to cut and run. With a lease you're tied for the duration.

 

[[TW]Fox]

Cutting and running from a pcp isn't exactly plain sailing either.

 

[Em3bbs]

Do companies ever check cars under these rules? Certainly I've never had one that does, same for my partner.

 

[rodenal]

Cutting and running from a pcp isn't exactly plain sailing either.

True, but it is a viable option given it's just a glorified weighted finance agreement, particularly if a decent deposit is put down - whereas a lease company will always try and get the full terms worth of payments before accepting a return on the car.

Do companies ever check cars under these rules? Certainly I've never had one that does, same for my partner.

Typically you'll get away with it if you've had the car for a few years, i.e lets say the OP buys a 4 year old car and keeps it for 3 years. Foot just in the door it's more likely to be picked up on. Plus at the end of the day the allowance is enough to cover their criteria, there is no excuse really

 

[Monster]

I should have mentioned that I'm taxed and NI'd on the allowance so I know its not going to cover it. I'm not fussed about spending part of my actual salary as I've no kids and such (yet!).

How does a PCP work? I need something I can easily get out of at the end of the 3 years as its likely after the 3 years my mileage will go back upto 25k/year, I'm just fortunate my new project is close for 3 years. Then I could be posted anywhere again.

I'm just stumped on whether its really worth spending out 20k for an older can which I own, or whether for the extra its worth getting a lease car which I don't have to worry about too much.

Will lease companies let you pay a larger deposit to get the monthly payments down or is it always set 6+35 for example and you cant change it? I'd rather put some more down up front and have lower monthly payments.

 

[p0ss3s3d]

With a lease typically you can do a 3+, 6+ or 9+ arrangement. I'd say go for a lease, if you've got a good job title and can get a letter saying you've got a car allowance then most lease companies will give you the car at the ['business price'+ the 20% vat] which often saves between 0-20% over the cheapest personal leases and 10-30% over a personal PCP.

Also worth noting with leases it's usually only good value if your buying a car that has manufacturer support that month. Like the 135i deals a few months ago or the C63 deals this month!

 

[xs2man]

PCP works by having a large final payment, usually a couple grand less than the dealer projects the car to be worth at the end of the term, based on the mileage you tell them. At the end of the term, you can simply hand the car back, or pay the final settlement figure and keep the car, or trade it in for a new car, hopefully with some deposit left for the next motor.

So, if you're only planning 10k per year, and tell them 25k per year, they work out your monthly payments based on 25k per year. More mileage means more depreciation, means higher payments per month. But be careful with this route though, as if you opt to hand the car back, you will have paid that extra per month for nothing. Equally, if you do more miles than you initially tell them, you will be charged an excess per mile. This could be anything from 3-20p per mile, depending on what car you go for. Usually around 7p per mile in my experience though.

It is pretty easy getting out of PCP deals I have found. You just pay off the settlement figure and away you go. Job done. Whether that's you paying it off yourself, a dealer doing it for you when trading in, or if they are buying, or if it's a private buyer purchasing the car from you, it all works the same way. Obviously what you buy now will affect how easy it is to sell later on. So a 318i might be a bitch because no-one wants one, where a 320d or 330d should be relatively easy to get shot of.

Most lease companies will allow you to pay in a bigger deposit I would imagine. But I probably wouldn't. You will lose any interest (with todays interest rates?) that you may have been able to accrue on that money. End of the day, you're paying the exact same over the term, so if something does happen mid-term, you still have the cash there to make up the difference.

Be careful with the S3 / Golf R options, as they aren't 4 doors, as you say, 3 or 5. A lot of these policies will be set up for saloons, hence the 4 door requirement. So something like a BMW F30, or a Passat / A4, or a C-Class. Or going bigger, Phaeton, F10, A6, E-Class. I would get some clarification regarding that aspect of the policy before purchasing something.

 

[MissChief]

I wouldn't be surprised if someone one who knows little about cars only put in 'four doors' to stop people using convertibles or coupes. I doubt they would have a problem with a 5 door hatch or estate.

 

[[TW]Fox]

True, but it is a viable option given it's just a glorified weighted finance agreement, particularly if a decent deposit is put down - whereas a lease company will always try and get the full terms worth of payments before accepting a return on the car.

I disagree, generally a PCP is tailored at the low deposit end of the market - if you have a significant deposit you are probably better off on another product like HP as you'll pay less interest - therefore its likely that the agreement will be in negative equity for a proportion of the term, making exiting from a PCP early difficult unless you have the funds to settle the agreement and then sell the car or you can negotiate a handback, both difficult if the car is worth less than the outstanding balance.

Generally, a PCP is a bad idea if you want the flexibility of an easy exit.

 

[[TW]Fox]

I'm just stumped on whether its really worth spending out 20k for an older can which I own, or whether for the extra its worth getting a lease car which I don't have to worry about too much.

My view is kinda biased as I've just opted for the first option rather than the second, but then if I believed the second was a better option I'd have done it so my view is still useful I guess.

Don't forget that with a £20k purchase you own the vehicle - it is an asset with a value. Yes, the value depreciates - it will be worth less with each year you own it - but it will still have a residual. You only know the total cost of the option once you sell the car. With a lease you simply pay to rent the car - the cost is known, but it'll almost always be higher. Which is best for you depends on your outlook.

Although the £20k car would be used, its unlikely to be a high mileage clunker from Bobs Autos, you'll be buying low mileage Approved Used cars from franchised main dealers with cast iron warranties you can renew. For me, the only difference in peace of mind between what I went for a brand new one is that my warranty doesn't cover interior rattles so I can't get them to fix the STUPID CHEAP SEAT BASE ARGHGHG. So, in the grand scheme of things, not a huge amount of difference.

Obviously the experience is different because with a lease you have a brand new car but with a used car you... don't... but provided you don't buy a crap one a low mileage AUC that's been looked after will still be like new inside and out.

The biggest benefit is that it probably allows you a nicer car. You could buy a higher used model than you would be able to lease for a similar outlay.

 

[Monster]

Lots of helpful responses giving me a lot of food for thought!

most lease companies will give you the car at the ['business price'+ the 20% vat] Also worth noting with leases it's usually only good value if your buying a car that has manufacturer support that month.

How easy is it to get those cheaper lease rates, do you just haggle it over the phone? I noticed the Golf R had it last month but I was waiting for my offer letter so couldn't commit. Is there any way to know which cars are going to be better value in advance or just trial and error?

Be careful with the S3 / Golf R options, as they aren't 4 doors, as you say, 3 or 5. I would get some clarification regarding that aspect of the policy before purchasing something.

I asked them and they didn't even seem sure themselves, kind of told me to go for a 5dr option if I could. I doubt they would be too bad on something like that but as I'm just joining I don't want to cause myself issues!

For me, the only difference in peace of mind between what I went for a brand new one is that my warranty doesn't cover interior rattles so I can't get them to fix the STUPID CHEAP SEAT BASE ARGHGHG.

Do Audi/VW/BMW all do these warranties? How much do you have to pay for them and what do they cover? That would be a big bonus if I could get a decent warranty for a couple of years for cheap.

The other big bonus is obviously the car is available now on an AUC and I can sort the trade in on my LCR at the same time and I can probably get Sat Nav etc if I look about.

 

[xs2man]

Warranty on a 3 series comes in around £500 per year, for fully comp, as long as you are below 60k. Over that mileage it doubles. Which isn't bad value. You'll get the first year with your AUC car, so only another £1k for the remaining 2 years of a 3 year term (assuming you buy a car older than 2 years old of course, manufacturers warranty is still 3 years).

They (manufacturers) will all do a similar thing, although I suspect the BMW one is amongst the best.

 

[[TW]Fox]

Do Audi/VW/BMW all do these warranties? How much do you have to pay for them and what do they cover? That would be a big bonus if I could get a decent warranty for a couple of years for cheap.

They do but I've no experience of anything but the BMW one. The AUC warranty you get with the car covers everything the brand new car warranty covers with the exception of bits of trim and rubber seals. The insured warranty you can renew with when it expires covers everything the AUC one does with the exception of the battery and the exhaust, IIRC.

The dealers can put extra warranty on when you buy the car - either for free as a deal sweetner or if they wont do that you can offer to pay whatever they'd pay, that'll give you 2 years of AUC warranty. It's significantly cheaper than the cost of renewing it yourself.

 

[233]

Pfft private plate on the lcr and deny it's old

 

[Monster]

Pfft private plate on the lcr and deny it's old

Unfortunately I have to provide the insurance details, MOT details and all vehicle details which they then check to make sure I have business mileage and such.

I've just seen a decent deal on a new BMW 330d M Sport - what's the view on the new model Fox?

 

[mjt]

Unfortunately I have to provide the insurance details, MOT details and all vehicle details which they then check to make sure I have business mileage and such.

I've just seen a decent deal on a new BMW 330d M Sport - what's the view on the new model Fox?

New 330d is an excellent car. Any decent deals on petrol equivalents? Seems pointless on 10k a year. 328i perhaps?

 

[Monster]

Just was browsing the lease sites and saw that one of them had a couple of 330d's in stock - was £350/month including business nav (not as good as pro nav but better than nothing...).

 

[[TW]Fox]

Thats actually quite a lot and don't forget you've got to service it, put tyres on it, etc etc. Also dont forget it's probably a 6+23 meaning there is a non refundable deposit of 6 months rentals, too, so £2100ish.