Car leasing

[GreetMe]

We're looking at leasing a car on a long-term basis for my girlfriend.

At the moment she owns a Mk4 Golf TDI (which she loves) but the average monthly costs (excluding insurance and fuel) are about the same as leasing a new car, and it's starting to need expensive bits replaced on it.

So what are the pitfalls of leasing? As far as I can see, as long as you give it back in the same condition in which you received it and you don't go over your agreed annual mileage, there shouldn't be any unpleasant surprises.

She's a director of her own company (but isn't self-employed) so would it be better to get a business lease or some other form of hire agreement?

Sorry for all the questions. I know nothing about leasing as I've always assumed it to be a complete rip-off.

Thanks.

 

[Deleted member 37751]

The benefits to hiring/leasing a new car nowadays seems to far outweigh the benefits of buying outright.

If you sit down and work it out, the hire costs over a certain term work out cheaper than the depreciation on buying new. For example, DSLiverpool posted about hiring a C63 for £455+VAT per month with (iirc) £2k deposit.

Dependant on what her business is, it may be better to lease a little van like a VW Caddy.

 

[GreetMe]

The benefits to hiring/leasing a new car nowadays seems to far outweigh the benefits of buying outright.

That's certainly how it looks.

Dependant on what her business is, it may be better to lease a little van like a VW Caddy.

Her business is observation and training so she only needs to transport herself and a small amount of training material. She'd like something Polo/A-Class-sized.

 

[jonnyMercUK]

Can she claim VAT etc? Business is cheaper if you can do it.

 

[Rory]

If she does it through the company then she'll have to pay company car benefit tax. If the company is really just her, then she might have problems getting credit in the company name.

Main disadvantages of lease are lack of flexibility - can cost a lot to terminate a lease early, and charges on return of the car if it's not in perfect condition. Funnily enough the two brands noted for issues in this respect are VW and MB (if leassed through the manaufacturers own finance company).

 

[GreetMe]

Can she claim VAT etc? Business is cheaper if you can do it.

Yes she can.

If she does it through the company then she'll have to pay company car benefit tax. If the company is really just her, then she might have problems getting credit in the company name.

We haven't investigated it with her business manager yet but my girlfriend said she thought the car would count as a benefit in kind so it might be cheaper to get a personal lease.

Main disadvantages of lease are lack of flexibility - can cost a lot to terminate a lease early, and charges on return of the car if it's not in perfect condition. Funnily enough the two brands noted for issues in this respect are VW and MB (if leassed through the manaufacturers own finance company).

Thanks.

I'd been warned about making sure that any dings or scratches were fixed before returning it.

 

[developer]

His and hers E55's - I kow where there's a (cheaper by the minute) example in Fraser St that's unlikely to have been sold yet.

I'm sure he'd consider some kind of lease deal .

 

[GreetMe]

I'm sure he'd consider all sorts of deals and not just to do with the car.

I see it's still on PistonHeads...

 

[A210AMG]

^ I'm sure you can get insurance against this?

Wheels being kerbed and the odd dent, especially in 3 or 4 years however careful you are its bound to pick up some war wounds.

Also check the Merc's for leasing, and the BM's it seems that when leasing the month costs of say a Astra can be the same as a B class or 1 series so you can get 'more' of a car for less than you think.

Lots of deals about, contact some brokers and see whats available. Also if your girlfriend has a private plate check as not all will let you put it on a lease car.

 

[A210AMG]

^ Daft thing is a new polo would cost the same as a nice E55.....

 

[GreetMe]

No private plate and she doesn't care what car it is as long as it's reliable and economical.

 

[Red C220]

1. You can claim back 50% of the VAT for a private vehicle if it's taken home by any employee. You can only claim 100% vat back for pool cars. HMRC are very hot on this.

2. Leasing through the company she will incur Benefit in kind tax and the limited company will also have to pay employers national insurance contributions on the vehicle as it will be classed as "an income".

3. Leasing through the business the car will have to be insured in the limited company name (minimum class 2 business use). Which will be in the region of 3x the price of insuring privately.



The upshot of all this is, lease it as a private individual and insure it as a private individual with class 1 business use. Then claim mileage/fuel back from the limited company to cover the "business mileage" incurred.

You will lose being able to reclaim 50% of the VAT and the vat on fuel, but compared to the BIK taxes and increased insurace costs you'll still be quids in.

This changes though if you lease a low CO2 rated vehicle, especially something like a Toymota Pious, the tax breaks given on these cars can be such that business leasing makes it cheaper.

 

[GreetMe]

The upshot of all this is, lease it as a private individual and insure it as a private individual with class 1 business use. Then claim mileage/fuel back from the limited company to cover the "business mileage" incurred.

Brilliant info. Thanks a lot.

At the moment she claims money back for mileage and all running costs come out of that so it sounds like the same sort of setup will carry over.