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Car or allowance - what would you take?

Discussion in 'Motors' started by Beta, 8 Jul 2012.

  1. Participant

    Caporegime

    Joined: 13 May 2003

    Posts: 31,939

    Location: Warwickshire

    Edit - doh, he's right again.
     
    Last edited: 9 Jul 2012
  2. Raymond Lin

    Capo Crimine

    Joined: 20 Oct 2002

    Posts: 66,813

    Location: Wish i was in .Lethal's house

    And think of the car he could ALSO finance as a second car for £500 a month! :D
     
  3. Jez

    Caporegime

    Joined: 18 Oct 2002

    Posts: 32,661

    He could afford to run any number of actually decent cars for the cost of the new low end model he currently runs. That is for another discussion though (the whole new vs old thing), we were just making the actual cost of this one absolutely clear as it doesnt look as if it was fully understood.:)
     
  4. Simon

    Capodecina

    Joined: 21 Oct 2002

    Posts: 23,923

    Location: Berks / Moscow

    Just wow
     
  5. [TW]Fox

    Man of Honour

    Joined: 17 Oct 2002

    Posts: 157,120

    No.

    You are paying £560 a month to drive a 320d for 3 years.

    The end.

    It's as simple as that.

    The fact it would cost you £340 a month to buy your own doesn't change the fact you are paying £560 (or whatever) to drive your company car.
     
  6. ZG002

    Capodecina

    Joined: 22 Jul 2004

    Posts: 10,628

    Location: Up north in Sunderland

    It's pretty crazy, You could have any number of cars a month for a fair chunk less than £500pcm

    I've owned a new car and tbh after a week or two it's such a pointless exercise.
     
  7. Ev0

    Capodecina

    Joined: 18 Oct 2002

    Posts: 13,899

    I was pretty set when I started this job that I was going to pickup a 320d m sport on a company lease for 2 years.

    Have to say the fact it's going to cost me £400 odd a month (lease cost out of my 'allowance' plus the cc tax) to be used for one trip a week, and that I'm currently seeing that money in the bank each month it's now looking a little doubtful I'll bother, or at least get something cheaper.

    The S2000 is doing a good job of it so far, the only spanner in the works is when we want to move house I could do with a chunk of cash to help out, and I won't have much to put upfront if I want to buy something else.

    As mental as it sounds a company car for a year or two would probably help in that situation, a 320ED runs to about £340 cost to me I think so not horrendous, just would have to live with it for 2 years :( That would also replace the wife's car though for 3 days a week so there's those savings as well.

    We get 18p a mile for petrol cars, 15p for diesel, but also remember if using your own car you can claim the tax back on the difference between that and the HMRC recommended rate. So at 40% tax that's another 10.8/12p a mile you get back at some point (my place are supposed to do this for you monthly and pay you the money). Not sure if you can claim that difference though if taking a company car though.
     
  8. rodenal

    Capodecina

    Joined: 7 Dec 2011

    Posts: 10,242

    If you're based in a central office the fuel can really swing it,I used to do 80miles a day just commuting to work that I couldn't have got back. Wouldn't have taken that job without the car in all honesty but that's a different set of circumstances again
     
  9. Participant

    Caporegime

    Joined: 13 May 2003

    Posts: 31,939

    Location: Warwickshire

    Even better is if you already have a car that you'll happily commute in...you've just given yourself a 6k payrise :cool:.
     
  10. Ev0

    Capodecina

    Joined: 18 Oct 2002

    Posts: 13,899

    How I'm starting to see it really, and now I'm used to that money each month won't fancy not having it anymore. Plus student loan finished this month so that's effectively another reasonable rise :)
     
  11. Tenzo

    Wise Guy

    Joined: 23 Jan 2012

    Posts: 1,225

    Ok, so I struggled to get this but I think I am there now.

    Options

    1 - I could pay c.£2600 per annum for a company car

    2 - I could receive c.£3600 to pay for a car, plus running costs

    Financial Impact

    1 - I am out of pocket by c.£200 a month

    2 - I am potentially cash neutral, with a clever car purchase maybe even taking home some extra ££

    Conclusion

    I do not see option 1 costing me £500 a month due to the loss of the extra income, as that money would be used to fund a car regardless.

    However, a company car would cost more. Perhaps many see it as a premium for hassle free, lazy motoring. Ideal for females.
     
  12. [TW]Fox

    Man of Honour

    Joined: 17 Oct 2002

    Posts: 157,120

    Thats it - don't think of it any more than that because the difference in net salary between the two options is £2600+£3600.

    No, you are out of pocket by more than that - not only must you pay £200 a month but you also dont get the additional salary you would have got had you not chosen the company car.


    But it DOES cost you £500+ a month. What this means is that your budget to play with for your private car isn't just the car allowance, its the car allowance AND the company car cost you'd have paid. Just like the amount you'd pay for a company car isn't just the tax, its the tax PLUS the opportunity cost of the payrise you give up to get the car.
     
  13. Tenzo

    Wise Guy

    Joined: 23 Jan 2012

    Posts: 1,225

    I see what your saying.

    If I am willing to pay £200 a month to run my company car, why not take the allowance and run a car for £500+ a month = the same cost as the company car.

    It's late and I've read this thread too much but by jove, I think I've cracked it
     
  14. aproctor

    PermaBanned

    Joined: 26 Apr 2008

    Posts: 4,078

    Location: Lincolnshire

    Wow, really surprised at the number of people who don't understand opportunity cost.

    Old net salary before company car - £2000
    New net salary with c/c - £1800
    New net salary with cash option - £2300

    If you have been offered a company car, your new salary is not £2000 net anymore, it is -

    £1800 with a car or £2300 without.

    Your old salary of £2000 is irrelevant for the equations. You do not earn that anymore.

    The difference is £500. This is what can be used to run a car.



    Your old net salary is - 2000 apples.

    You need a bunch of bananas each month and the company offers two options -

    A new net salary of 1800 apples and they will supply the bananas.

    or

    A new net salary of 2300 apples but you have to source your own bananas.

    You will never get the 2000 apples option again, it is irrelevant, a pay cut etc etc.

    The difference is between the two options is 500 apples. This is what can be used to trade for bananas.
     
    Last edited: 10 Jul 2012
  15. Participant

    Caporegime

    Joined: 13 May 2003

    Posts: 31,939

    Location: Warwickshire

    That's a day I'm looking forward to. I keep getting tempted to pay it off, but the rate is only 1.5%!
     
  16. Jez

    Caporegime

    Joined: 18 Oct 2002

    Posts: 32,661

    I had you down as much older than someone whom would have recently graduated. Funny how the internet masks the real people behind the posts :)
     
  17. alx

    Soldato

    Joined: 10 Aug 2003

    Posts: 6,029

    Location: Dubai, UAE

    It can take a fair while to pay off a student loan though.
     
  18. J1nxy

    Mobster

    Joined: 17 Feb 2003

    Posts: 4,987

    Location: Northampton

    My car allowance pays for my Jag, my company car would have been an Insignia...that was a tough choice...
     
  19. Beta

    Hitman

    Joined: 18 Oct 2002

    Posts: 672

    Location: Leeds

    Think this probably got missed in the conversation last night.
    What would your recommendations be if we took the cash?

    Can be hatch/estate/saloon. Rarely use back seats at the moment but do throw quite a lot in the boot with the seats down.

    Don't need diesel due to low mileage. Miss the fun factor f the celica as the civic is dull as ditch water to drive.

    Insurance isn't an issue, was quoted roughly £300 on the 125d.
     
  20. LiE

    Capodecina

    Joined: 2 Aug 2005

    Posts: 21,845

    Location: Milton Keynes

    Beta, for what it's worth I took cash for my car allowance for a couple reasons.

    1. I don't need/want a brand new car. £500/month is still £500/month.
    2. I prefer choosing something older and something I want.
    3. I pocket the extra.
    4. The cash goes towards my car meaning I have something to show for the money.