Leasing Car/Buying Car for work?

rabbitinlights

Hello,

I'll be starting a new job in the next 2-3 weeks and I will be doing between 20k & 30k km per year all over Ireland. The company is UK based (I'll be based in in Dublin) and were meant to be supplying me with a car, but it turns out they can't so they are giving me an allowance of 5k euros a year to run my own car along with a fuel card.

Here is where I get a little lost, I don't currently own a car and only just sold a 2005 Audi A4 2.0 TDI a few months ago just before I was made redundant from my previous job. I don't particularly want to go and get another large car loan to finance this in case the job isn't what I expected or something else happens and I get left with the car and no job.

I'm looking at personally leasing a car as this would avoid any initial lump sum payment and I don't have to worry about insurance/tax/maintenance. Does anyone have any personal experience in this and could you recommend any particular companies to approach?

Thanks.

Drummerboy08

First things first, is the 5k inc or ex VAT? If its inc, you might squeeze something like a Zetec Focus out of it, including your maintenance. If its ex, its a different ball game.

However, you'll still have to insure the car, as its not up to Fleet companies to do this.

If your new employer is giving you a car allowance, I assume they wont let you put the lease in their name, which means you will be financing it yourself (the finance will be in your name). I'd approach them and ask if they could lease the car for you (assuming they have an Irish Bank A/C) as this means the finance of the lease wont be in your name.

If you PM me your details, i'll look at some options for you in the morning.

There's another fleet guy roaming around here too, but he's a bit shady...:D (Sorry Stu)

rabbitinlights

Thanks a million, PM sent!

Does anyone have experience in long term rentals (rolling contracts etc) with companies like enterprise etc?

Would be handier than entering a long term lease.

S.

Drummerboy08

No bothers!

As for long term rentals, it will be more expensive, and more than likely you will have a base model petrol car as diesel and rental dont seem to go together in Ireland.

The advantage is obviously you wont have any financial worries regarding this, as there is no finance on the car.

BigZack

This is a little tricky! You say they're giving you a car allowance of 5k per annum. Assuming you're employed directly by the company you've got to be careful that the 5k isn't treated as salary (most car allowances are treated as non-pensionable salary). If it is you'll be liable for PAYE and PRSI on it which could reduce it by 50% .

The only way to claim it tax free is to keep a revenue compliant logbook of all your business trips. Record where you go 'from' and 'to' along with the 'purpose' of the trip as well as the distance involved and you can claim motor travel rates as reimbursement directly from your UK employer tax free (the good news for them is that they won't have to pay employers PRSI on it).

Signing up to a PCP (Personal Contract Purchase) lease might be a good way to look at it but if I was you I'd try and finance something decent from the auctions over 5 years on the 5k. That way you'll actually own something at the end of the term. With a PCP you'll own nothing and have to return it after 3 / 4 years.

You're 5k gives you a monthly budget of 416 per month. That raises 20,407 over 5 years (9% APR) with which to buy and maintain your wheels. Stick that into carsforsaleireland.ie and you'll find a nice diesel 08 diesel passat that's just on the money. http://www.carsforsaleireland.ie/used-cars/detail/2008-Volkswagen-Passat-Carlow-Used+Car-Diesel-Manual-123018/

PS. Watch the fuel card. That could be treated as a BIK also!

rabbitinlights

BigZack wrote: »

The only way to claim it tax free is to keep a revenue compliant logbook of all your business trips. Record where you go 'from' and 'to' along with the 'purpose' of the trip as well as the distance involved and you can claim motor travel rates as reimbursement directly from your UK employer tax free (the good news for them is that they won't have to pay employers PRSI on it).

Thanks for the post, it's a lot of help! How would I go about setting this up?

Also do most garages do a PCP lease option on most cars?

Drummerboy08

rabbitinlights wrote: »

Thanks for the post, it's a lot of help! How would I go about setting this up?

Also do most garages do a PCP lease option on most cars?

Yes, alot do. You may find better value with this option I'm afraid.

HashSlinging

I would tread carefully on this one, maybe you'd be better off buying something with cash yourself, e.g. like the SEAT ibiza I posted in another thread. That way if things didnt work out with the job you could call it quits and still have something that was reasonable with no finance hanging over your head, as it sounds like you would be left with a huge monthly payment. (I know the ibiza isnt the best example but you know what I mean) and not keeping up the repayments would of course effect your credit rating if you decided the job wasn't for you.

I dont think you can simply hand back a car to a leasing company after a couple of months into a long term lease agreement.. I could be wrong though. edit...You could get a short term lease though which would probably be the best option, but a good bit more expensive.

rabbitinlights

Yeah, buying a cheaper (5-7k) car could really be a good option, what would people recommend? Golf? 3-Series? A3? Skoda? or something nice and comfy like this;

http://www.carzone.ie/search/BMW/5-Series/525-Auto/200929194657774/advert?channel=CARS

S.

robtri

rabbitinlights wrote: »

Yeah, buying a cheaper (5-7k) car could really be a good option, what would people recommend? Golf? 3-Series? A3? Skoda? or something nice and comfy like this;

http://www.carzone.ie/search/BMW/5-Series/525-Auto/200929194657774/advert?channel=CARS

S.

thats a nice car.... very nice.
its within your budget, but the tax is €935.00....
if you can live with that then its a great car..

R.O.R

Drummerboy08 wrote: »

There's another fleet guy roaming around here too, but he's a bit shady...:D

Humph! I'll deal with you if you ever turn up to a meet

TBH it doesn't sound like the easiest of situations. €5,000 is a poxy allowance for a car in Ireland - sounds like they've taken the UK allowance and converted it as most companies over the water are unaware of the cost of cars in Ireland. If that's including VAT then your fuel bill will probably come out similar based on your mileage.

A couple of issues with a PCP - as mentioned above, you will get bent over if you try to return the car early. Industry standard early termination is 50% of the outstanding rentals. If you are 2 years in to a 4 year contract and try to hand the car back, you'd have to pay 12 months rentals in one lump sum. I checked figures for a new customer of mine last week with one of the smaller leasing companies - they wanted ALL the outstanding payments to hand the car back 2 years early :eek: Needless to say, that's not going ahead.

The other issues may be insurance. I'm not too well up with PCP's but if the car is registered to the leasing company a lot of insurance companies won't touch it, leaving only Fleetinsure through Arachas. Most recent policy I organised through them was €3,000 + for 2 years insurance so it's far from cheap.

If it were me, I'd get some figures from leasing companies and go back to your new employer to show that the proposed allowance is no where near enough to put you in to a suitable car (remember, they still have a duty of care while you are driving on company business). If that doesn't bear any fruit I'd probably be getting a bank loan for a suitable car with the repayments over as short a period as possible, with the payments around €100 less than your allowance to cover tyres, tax and maintenance.

If you want some estimated monthly maintenance costs, PM me with what types of car you are thinking of. You'll also need to consider the insurance cost (don't forget to mention the car will be used in connection with work rather than just Social, domestic and pleasure).

Drummerboy08

The more I think about this, the more I think you'd be better off getting a loan for a car over two or three years. As ROR pointed out, a PCP will spring all sorts of problems.

The maintenance side of things is easier to predict. Depending on the car, it'l be in and around the €100 - €120 mark per month. I'd go for something available with a long life service interval, like a VW, or Opel, so your servicing it every 30k as opposed to 20k. Makes a huge difference to maintenance.

BigZack

You might be able to negotiate a long term rental with Northgate Vehicle Hire. I think their fleet is a bit older than most so the rates tend to be that bit cheaper. Tell them you'll be providing your own fully comp insurance (make sure its the right class).

rabbitinlights

Thanks guys for the response, it's really helpful.

I'm still thinking that a straight lease would still be a good option as this would include insurance (doesn't it?) which seems to be a bit of a deal breaker when I add it to the cost of a PCP.

I obviously know I wont own a car at the end of it, but I want to limit personal risk so I'm also trying to get my employer to put it in their name as I don't fancy signing a 3 year lease in my own name.

Whats the pro's/con's of leasing a car in Ireland? Are they new cars?

S.

R.O.R

rabbitinlights wrote: »

Thanks guys for the response, it's really helpful.

I'm still thinking that a straight lease would still be a good option as this would include insurance (doesn't it?) which seems to be a bit of a deal breaker when I add it to the cost of a PCP.

I obviously know I wont own a car at the end of it, but I want to limit personal risk so I'm also trying to get my employer to put it in their name as I don't fancy signing a 3 year lease in my own name.

Whats the pro's/con's of leasing a car in Ireland? Are they new cars?

S.

Insurance is not included in a Lease in Ireland as you need to be a licenced insurance broker to provide it. It can be arranged at a cost though (see my figures above).

If the Lease goes in to your companies name then you become liable for BIK.

If you do go that route, you will be able to lease any make or model of brand new car.

HashSlinging

Along with getting the quotes R.O.R mentioned the car you should be going for should be the cheapest model small capacity diesel you can get, something along these lines. I know its not a fun car but it is comfortable and it means your outlay will be minimum and the allowance your paid will cover it, leaving you with a bit extra in your pocket for maintenance, and to save for the next car. I wouldnt touch a large capacity petrol at all.

I used to do country wide work also, and was paid 10k a year in allowance, it was handy but only as I had already paid off my car. So most of the money went towards my next car, which was another second hand bargain..

Skipper12

I am in a similar situation to the OP. However I am coming from having a company car for the last 6 years to deciding to purchase my own. Due to being mostly office based and not doing high mileage I have been on the highest band of tax 30% OMV which meant paying approx €390 a week net in tax while driving a highline Passat. The company provided insurance, tax and fuel card.

If I go on my own the company will give me an allowance of €6,600 which will be taxable and the mileage rates will be the civil service rates. So with the allowance and extra BIK in my wage this will mean approx €714.50 extra a month before I have done a single business kilometre. Estimating the business mileage to be 26,000km for next year that will mean mileage allowance will be approx €9281. So all in with allowance, extra BIK and mileage this will mean an annual figure of €17,850.

My thinking is to get a loan to purchase my own car using "mostly" the extra BIK and allowance to cover the loan and pay the loan off as soon as is possible. example being €17K loan could be payed off over 2 years @ €765 per month. The insurance, tax, diesel, maintenance etc would come out of the rest of the €17,850.

Here is where I need the advice/help. I was thinking to purchase an 07 highline Passat similar to the one I am driving for around €17K. The alternatives are the market is so good now is to go back a couple of years and pick up an older Audi A4 or BMW 3 series or get a larger loan and buy new car and spread the loan over longer period. Which option would make the most sense to people with experience in this field??? I suppose the long term goal is to replace the car every couple of years and build up the funds sufficiently to purchase a new car. (probably dreaming!!)

Also please feel free to point out any flaws in my thinking or slate me if you feel the need.

Thanks