Where do we stand on returning new car?!

[lihi]

Hi

 

My partner bought a new festa on HP in July of this year over a 4 year period, he has just been offered a company car.

 

We need to cut down on our outgoings and only bought the car because he needed it for work.

 

Where do we stand, what are our options.

 

Thanks

[Chesterexpress]

Whatever you decide upon you are going to lose out. Best bet is to ask the dealer to buy it back and see what they offer, but unless you put down a large deposit I would be surprised if you get enough to pay off the HP agreememnt.

[MrShed]

Indeed it may be worth considering the option of refusing the company car...it may actually cost less this way.

[aj84]

If you got it in July, I suspect your finance (first payment) started in August? You will have massive negative equity on it as from what I know, you wouldnt be able to just hand it back even under the finance agreement (you have to pay x amount to do this)

 

BUT... smaller cars are worth a fair bit this day and age. Without actually doing it, you could find out how much it is worth and get a settlement figure from the HP company. It may be that you don't have to pay THAT much and in the long run, it makes sense to pay the remainder negative equity off - thus terminating the agreement (or rather settling it)

 

I know a few people who have done this before though it has been after 6 months or so- the dealership gave a good deal for the car, paid the negative off which was somethign on the lines of £3000 or so but they knew in the long-run, they wanted to do this and recover rather than spending out on not only the car but all the extra that went with it until the agreement ended or you could hand it back

[lihi]

End of July was the first payment plus an admin fee, it was a finance deal so he didn't put down a deposit.

 

We thought about keeping the car and choosing the 40p per mile but it's a 2litre sport fiesta and is expensive to run just to and from the office, to cover the miles that this company want him to do now is not worth the agro that these miles do to a car and company cars live on average 3 years which means we'd still have another year on the finance deal to pay once it's been killed from being driven to death.

 

I'd already resigned myself to the fact that we would have to pay something off. I'll follow your advice AJ and get a current value and a settlement from HP.

 

Thanks guys

[raydetinu]

dont forget thst you will be taxed for the use of a company car so it will not be free!

Some companies give you an allowance for providing your own car in lieu of a company car, usually about 4k a year ( which will pay the HP ), but then you dont get the 40p/mile just a petrol/ oil allowance. worth checking if this an optoion.

You can then hand your car back to HP company in two years, and go for the company car then?

[lihi]

Thanks ray.

 

I completely forgot about car allowances and the cheaper rate of mileage rate.

 

Thanks will give that a go.

[patdavies]

dont forget thst you will be taxed for the use of a company car so it will not be free!

 

Very true

 

Some companies give you an allowance for providing your own car in lieu of a company car, usually about 4k a year ( which will pay the HP )

Which is also taxed as income

 

, but then you dont get the 40p/mile just a petrol/ oil allowance. worth checking if this an optoion.

Yes you do. The 40/25 p per mile is for own car business use - it does not apply to company supplied vehicles.

 

For example. My company pays me £360/month car allowance and 15p/mile for usage.

 

The £360 is lumped with gross salary and taxed. I claim the 15p/mile and then claim the difference between that and the tax rates (40p/mile first 10,000 miles, 25p/mile thereafter) as a tax allowance at the end of the tax year.

 

Be aware that if you work in local government, there is a totally different arrange in place with HMRC.

 

Also, don't forget that you will need Class 1b (business use) motor insurance, not just SDP and commuting.

Edited October 3, 2008 by patdavies

[lihi]

Thanks Pat

 

Noted.

[raydetinu]

Yep sounds about right, some people forget about the tax claim back between the allowance you get and the 40p the tax allowance you can claim for, and if you do a lot of miles this can all add up.