Car financing/leasing?

[TechMonkey]

 

On a slightly more serious note, I was looking into getting a car on lease but cannot get over the fact that I would be renting the car and paying money for something that I have no ownership of. I realised that I would be perfectly happy trading my current banger in for a car selling for 10k and taking out a loan for the difference. Cant remember the exact figures but over 3 years the lease worked out to £9540 and the loan worked out to £6840. Even allowing for the spread of insurance, MOT, Service, and repairs....to me it works out better doing that with an asset at the end of it.

 

I know that one is a new C Class merc and one is a used Discovery TDV6 BUT I would be happy with the Discovery.....

 

It really comes down to personal preferance at the end of the day.

 

Yeah, you do need to check the figures. If you get a vehicle that is going to depreciate very quickly then leasing just doesn't work out. An example i saw was for a high spec Jag. Ended up being £31k over 3 years for leasing, whereas only £17k for a loan. But you are kinda of comparing apples and oranges. Of course you are going to be paying less for a second hand vehicle and if you look at it from an asset point of view you could take the old adage "If it appreciates, buy it, if it depreciates, lease it."

[michael2k6]

Everybody's been spot on apart from difinity, who is wrong, PCP isn't for business use as such, bainbridge is correct.

I've had a few over the years and of different types, and i'm picking up a new one on thursday, sending back my current one on the 15th. As anything you like but i think it's just about been covered!

 

Difinity - what you're thinking of for businesses is... if a company own or are leasing a car in their name it's company car. Then the employee pays company car tax. The whole point of having a PCP is so that it ISNT a company car - therefore the employee pays no tax, and the company pays no tax. There used to be two ways to do this; you could have a car allowance; which was taxable as a benefit (but usually cheaper than being taxed on a car, as the car you're taxed on list price too), or you could go through something called an ECO scheme (employee car ownership). That scheme was agreed by HMRC as being tax free so how it worked is the company gave you a set amount per month, and you owned thecar, but cosigned by the company. So you had to use a specific leasing company and conform to specific rules, the company would insure the car too, etc. But as it wasn't a company car you didn't have to pay tax. HMRC have now given notice to all companies signed up to this, that this must cease, as they realised they're being done out of tax left right and center. To resolve that my company changed to giving me a cash allowance - but that meant I was taxed on it. And as that left me out of pocket, I made them gross up my salary to cover the tax I was then paying (and the tax i'd be paying on the gross up). Everything worked out fine.

 

So yes... PCP isn't just for business. You were kind of right, but thinking of something else.

 

The only thing I'll repeat is excess mileage figured, and check out whether it's a maintained lease, or not (IE any out of warranty faults are covered, tyres might be covered as long as you're sticking to the mileage, etc).

 

Mic