Private lease versus buy

Chris Muriel

Well-known Member
I am changing my role within the company I work for and will no longer have a company car.
For the last 9 years we have had company cars on a leasing deal with PHH , the car being changed every 3 years.
I have grown to quite like having a new car every 3 years.
Now I will have to get my own car (although I will claim business mileage allowance on the reduced amount of business trips that I'll be making).
This does mean that I will no longer be hit by the Inland Revenue with company car tax :)
I am now trying to evaluate whether to buy a new (or possibly nearly new) vehicle or to go for a private leasing arrangement ( probably 3-5 year period with servicing included).
I know that some car manufacturers also have some schemes that are similar to private leasing , e.g. Nissan Preferences which after 3 years give you a choice of a guaranteed trade in value, paying a fixed fee to own the car or getting another new Nissan for the following 3 years.

1) Does anyone know which other manufacturers have similar schemes ?

2) Has anyone got any specific hints or thoughts on choosing or comparing different leasing companiesd and deals ?

3) Any other advice also appreciated.

My current company car is a Mercedes C220 diesel AMG coupe (previous was a Lexus IS200) but I may well move down to something like an Avensis or a Citroen C5 (still needs to be family or executive grade/size).

I suppose the best deal of all might be a new car with 0% finance - which I can recall seeing from time to time in adverts in the papers.

Chris Muriel, Manchester.
 
D

Dog with 3 legs

Guest
I'm in a similar situation to yourself and have looked at lots of different finance deals.

No matter what otion I looked at, I found the cheapest long term solution is private finanace (ie personal loan at less then 6% APR or less than 5% if secured).

This gives you the benefit of maximum flexibility and lowest cost.

I've realised that all other deals are just another way for the car dealer to make more on the deal - the benefit to you being it appears simpler in that you are getting finance from the place that's selling you the car.
 

RBZ5416

Distinguished Member
The bulk of the cost of buying or leasing new is going to be depreciation. Your idea of "nearly new" is the way to go with (as Dog says) personal finance if you need it. To make this really work you need to look at the mass market stuff that depreciates rapidly in the first year. Generally, a year old prestige model will yield a very small saving over new, especially at a franchised dealer. Pick up a copy of What Car or similar for a guide to decpreciation costs.

Inland Revenue rules allow you to claim 10,000 miles at 40p/mile & 25p/mile for anything above. You will pay no tax on this whatsoever. If your employer pays a higher rate then you will be taxed on the difference. If they pay a lower rate you can offset this against your normal PAYE. Details here.
 

Joe Fernand

Distinguished Member
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Chris Muriel

Well-known Member
Thanks for your advice thus far, guys.

That link to the MotleyFool website is very useful , Joe.
Fortunately, it's possible I may be able to hang onto my existing company car until Feb/March 2006 (when the current lease runs out) , simply paying for my own private mileage from November this year (when our new fiscal year starts and my job transition occurs).
This gives me more time to look at my options and gather background information.
The company pays private mileage at the Inland Revenue rates - which makes the tax situation easier.
I'm going to have to visit a few local dealers (e.g. local Toyota dealership to see what they could offer on a new Avensis) in order to do some comparisons.
Definitely won't dive in until I have plenty of comparisons between different vehicles and ways of financing them though.

Chris Muriel, Manchester
 

Mep

Well-known Member
would it be possible for you to get one via your company through PHH and pay the monthly costs yourself on the basis that if your company has a decent sized fleet they will probably get beneficial rates to what you could get as an individual?
 

SanPedro

Well-known Member
Having leased/contract hired about a dozen cars over the last few years I thought I'd throw my tuppence in.

Personally I wouldn't bother with the maintenance contracts these days as they are fairly expensive - most cars have 3 year warranties so that takes care of any major repair issues.

I also wopuldn't go with manufacturers finance, in general, as from my experience these tend to work out more expensive - but double check all the same as occasionally they do have some good deals.

The back pages of car mags are full of ads for leasing companies. What I've found works well is to shop around for whatever vehicles the companies have on special offer. A lot of the firms will have good rates or get a special deal with a certain manifacturer, or a particular model.

If your heart is set on a particular car then go for it, but if you're not too fussy then you can find some cracking deals.

I got a 1.8 Mazda MX5 sport for my wife for £170 (+ VAT) a month (based on 13K miles a year). Considering this is an £18K car I doubt you'd be able to buy anything cheaper than that for that value of car. Similary priced Mondeos and Vectras are well over £200 per month.
 

Napier

Standard Member
Hi All,

Here is my standpoint on it all. It is a difficult situation and there is no doubt in that. I used to have a company car scheme and it was taken from us leaving only a car allowance of which is taxed. However due to not having a company car my monthly pay was not affected by this and so it all sort of nearly evened up to the same in value.

Anyway what is really annoying in not having a company car is depreciation. If you have a company car you can use and abuse it and then hand it back after three years. However if you go personal finance, not only do you have that initial pay out of seriously large amounts of money but also a adition to your credit rating (whether that be a positive or negative is down to personal circumstance). Then after a period of running the car you come to sell it, you need to get good money for it. At the least you need to pay off the loan. A loan is a risk if you are made redundant unless you take out cover of which few do. Contract hire you can have cover included at a small cost. I have chosen recently to buy a second hand run around for a while and soak up the miles in that. However I want a new car again so am thinking of contract hire.

It is true that if you shop around you can get different deals, I am not so sure many of these are better than others. Normally they offset the depreciation into the monthly charge and if you are doing a balloon payment at the end of the hire period they will increase this to get monthly payments down and make it look like a better deal.

Just be careful that you do your sums and also run several companies off against each other to give you their best quotes, they all want your business so do your research.

I will be.

Napier
 

SanPedro

Well-known Member
Napier said:
Hi All,
It is true that if you shop around you can get different deals, I am not so sure many of these are better than others. Normally they offset the depreciation into the monthly charge and if you are doing a balloon payment at the end of the hire period they will increase this to get monthly payments down and make it look like a better deal.
Very true. Watch out for supposedly great looking monthly payments that actually want 30 - 40% up front as an initial payment. This is especially true of franchised dealers. Lease companies generally ask for 3 + 35 payments on a 3 year deal.

The balloon payment isn't a big deal if you are planning on starting over again at the end of the term as you hand the car back to the lease company.

Only think to watch out if you are handing a car back is that it needs to be in really good condition when it's handed back, or they charge you for the repairs that are needed. Some minor parking digs and a few scrapes can set you back a few hundred pounds at the end of the term.

I've leased/contract hired because it makes budgeting easier - and because I think it's cheaper than buying, assuming I get the right car at the right price.
 

MartinImber

Active Member
I'd recommend buying a 3 year old car for a lot less than a new one and keep the money
 

mh123

Active Member
I'd suggest looking for a car thats about 1 year old, so (typically) at least 2 years warranty remaining; depending on make/model you'll probably get it for around 25-30% less than a newbie.

A good large car buy right now would appear to be a Vauxhall Signum - basically the top-end souped-up vectra. 1 year old these are available for about 50% off new price. Problem is the depreciation will carry on the same crazy spiral.

Most of the depreciation on a motor happens in its first three years, with year one being the biggest drop.

If you can get over the 'snob factor' of driving a brand new motor (and lets face it how long does the honeymoon last anyway?) you can save yourself a packet.
 

Chris Muriel

Well-known Member
Thanks, I had ignored the Signum totally but checking on Parkers website and elsewhere they do seem to represent good value at a year or 2 old (I quite like the specs and reviews of the Elite diesel models).
They look poor value on PCP or lease due to their dire depreciation, but, as a secondhand purchase, seem to be worth considering.
Checking this along with the Avensis2.2D-4DT and Mazda 6 diesel TS2 models at present.

Chris Muriel, Manchester.
 

Toasty

Distinguished Member
crocodile said:
Inland Revenue rules allow you to claim 10,000 miles at 40p/mile & 25p/mile for anything above. You will pay no tax on this whatsoever. If your employer pays a higher rate then you will be taxed on the difference. If they pay a lower rate you can offset this against your normal PAYE. Details here.
Sorry for a quick off topic question, and I think I know the answer already, but can you include your journey to work with business miles?
 

Chris Muriel

Well-known Member
No , journey to work does not qualify ; we checked with this with the inland revenue years ago.
The workaround for that would be to visit a customer en route I guess.
Anyway my nearest office is 210 miles away in Walton on Thames and from November I shall be reporting to an office in Limerick, Ireland.
In my case I will be working from home anyway (as I do for about 50% of the time already) ; I do get a small "home office allowance" for this already.

Chris Muriel, Manchester
 

SeanT

Well-known Member
mh123 said:
A good large car buy right now would appear to be a Vauxhall Signum - basically the top-end souped-up vectra. 1 year old these are available for about 50% off new price. Problem is the depreciation will carry on the same crazy spiral.
Renault Safrane comes in a similar category of big expensive car for not a lot of money I believe - how old are these now?
 

Toasty

Distinguished Member
Chris Muriel said:
No , journey to work does not qualify ; we checked with this with the inland revenue years ago.
The workaround for that would be to visit a customer en route I guess.
Thanks, I suspected as much.
 

MartinImber

Active Member
I paid £5000 for a 5 year old car which was £24000 when new!
 

Chris Muriel

Well-known Member
"I paid £5000 for a 5 year old car which was £24000 when new!"

Not bad - care to tell us what the car was , Martin ?

Sean, basically the (somewhat quirky) Vel Satis replaced the old Safrane.
Thus they must have deleted the Safrane around 2002.
A lowish mileage Vel Satis from 2003/4 might also be worth looking at (I just had a look at the specs and a few reviews) ; however, they are quite rare.
Parker's website has a useful depreciation calculator.

Chris Muriel, Manchester.
 

MartinImber

Active Member
Chris Muriel said:
"I paid £5000 for a 5 year old car which was £24000 when new!"

Not bad - care to tell us what the car was , Martin ?

Sean, basically the (somewhat quirky) Vel Satis replaced the old Safrane.
Thus they must have deleted the Safrane around 2002.
A lowish mileage Vel Satis from 2003/4 might also be worth looking at (I just had a look at the specs and a few reviews) ; however, they are quite rare.
Parker's website has a useful depreciation calculator.

Chris Muriel, Manchester.
Omega MV6 basically a bargain
 

Chris Muriel

Well-known Member
Another thing I have noticed is that Rover 75's are still available new and unregistered - with some apparent bargains to be had.
I may look at the Rover 75 Connoisseur SE (saloon).
I guess main dealers for Rover are now a thing of the past since Rover went bust - but spares and servicing should still be available.

Chris Muriel, Manchester.
 

Steve.J.Davies

Novice Member
Depends on your budget.
AUDI A8 price falls like a lemming off a cliff - well built nad can last donkeys. but if they go wrong big bills !!!

Definately go for a well loved quality used car - the independent service outlets often can point at well loved ones for sale, with immaculate full histories. They can also tell you which model has which foibles, which gives them less trouble etc projected service costs. Main dealers won't tell you any of this !!!


Many models good for 200-300 thousand miles. and a previous owner will have found out of its a lemon already !! Used Car Buyer used to be a good mag - but I think its degenerated into a sales rag now. Still has some useful info though.

I suppose it all depends on how long you will keep it for and how many miles you will do. Best thing (to me) about company/lease cars is you don't get a sudden shock when you have to buy a set of tires etc..

Take your time and research well...

save a few bob and buy one that doesn't have a cam belt !!!
 

Steve.J.Davies

Novice Member
oh yeah, if its from a dealer/garage christmas week is a great time to buy, no one else does so they are desperate to move anything ! and despite the reg numbers changing in spring and autumn that jan tickover still makes a difference...
 

FaxFan2002

Well-known Member
I've bought a 3.5year old bmw 530d estate with about 41k miles on it for 19k. When you buy an approved bmw you get a full years warranty (regardless of mileage and age). Which was useful since the turbo recently blew up and it needed replacing along with the manifold and full exchaust system.

Also my boss was looking in the showroom and you get a new shape bmw 730d for 30k (with relatively low mileage - about 15,000) - this one had all the toys on as well!!
 

Paul O

Active Member
For personal leasing, Lex looks quite good and they give you online quotes, so you can play with the options to get an idea how much the difference is between years, miles, new vs. nearly new etc...

Worth a look. I think the APR is largely higher than loans though.

http://www.lexfreechoice.co.uk/
 

Chris Muriel

Well-known Member
The online quotes facility is good.
Making GAP insurance mandatory is not good.

Chris Muriel, Manchester
 

johnelf

Standard Member
Having Leased two cars for myself, as i am self employed and could claim the majority of the vat and set it of against expenses, I now favour buying a newly new instead.

I calculated I had spent 28k over 6 years and actually had nothing to show for it :eek: forgetting the tax reclaim that is at 40% so say 18K.

My advice, buy a personal number plate with your savings, then they will never know the age anyway and you have the best of both worlds :)
 

GW43

Well-known Member
If you are happy with your current car you might want to try and buy it from the leasing company when your job changes. I did this a few years ago when made redundant, and got a car that was £16,500 when new for £5,700 - it was two and a half years old and had done 40,000 miles - about £3,500 less than would have cost me from a dealer.
 

Chris Muriel

Well-known Member
GW43 said:
If you are happy with your current car you might want to try and buy it from the leasing company when your job changes. I did this a few years ago when made redundant, and got a car that was £16,500 when new for £5,700 - it was two and a half years old and had done 40,000 miles - about £3,500 less than would have cost me from a dealer.
I considered this - but wife hates the current car (Merc C220 AMG coupe) and I want a change anyway - but thanks for the thought anyway.

Chris Muriel, Manchester.
 

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