Just wondering what other members think about the best way to lease a vehicle.

 

I drive a company car and currently drive between 12,000 and 13,000 miles a year. My current car (leased) is about to reach the end of the 3 year contract in Nov and I have asked my local dealer for a quote to replace the car with another based on doing anything from 12,000 to 15,000 per year on a 3 year contract, roadside assistance / full maintenance and tyres inclusive.

 

I have been told by my line manager to get a quote based on doing 30,000 miles a year with everything else as above.

 

My current mileage is 33,600 so I reckon I will be around the 36,000 by November, hence my 12,000 to 15,000 envelope on the mileage seems to be reasonable to me.

 

My theory is that the car I'm looking at is the Superb 140PS L&K DSG so I reckoned that being a better then average spec car, it will hold its value more with a lower mileage after 3 years and so the actual lease value would take into account the higher residual value and thus make the monthly payments lower then basing the lease around a car that "potentially" looks like it will be returned after 3 years with around the 90,000 miles on the clock. Because of this, surely they will load the monthly payments up to ensure that they don't lose out, wont they?? I have heard of others that have been charged a extra fee per mile over the original estimated mileage because the residual is not going to be as high as they had originally thought.

 

The way I see is that by telling them that I will be doing far more miles then I will really is going to cost my company more per month  and when the car does get handed back, the leasing company will win hands down with higher premiums being received over 36 months and then they end up with a car with far lower miles on the clock so will gain the extra residual value as well.

 

Am I right in my assumptions here or am I wrong??

I would recommend you get as close to your real mileage as possible and go slightly under as you can never recover the overpayment for services and tyre not used., 

 

I have privately "leased" my last three cars and as I do 20,000 miles a year so took out 60K 3 year contracts.

 

My first, an Audi A4 Convertable 1.8T DSG covered 66K miles and I suffered at trade in to a new Skoda Superb (11p penalty charge per additional mile.

My second Superb 170 CR DSG Elegance Twindoor passed back with 60 K but they were not happy to give me the full "guarantee" as there were wheel scuffs and stone chips.  I then took it to webuyanycar and got significantly more than Skoda offered and I mean signficant!

My current a 3.6 V6 Skoda - I not expecting much as the guaranteed residual is so small anyway £500 either way wont amount to much.

 

But back to you main question - they will load the lease price based on mileage, servicing and tyre replacement.

 

BTW I took out tyre contracts on my first two cars and having suffered eight, yes eight, punctures that are not covered I decided to not have it and over 32,000 miles have only replaced the fronts whereas they wanted circa £50 per month for full tyre replacement over life of contract .

 

HTH

Agree with above , however if company are leasing the car then the leasing payments will be tax deductible and they will "benefit" more from higher payments- may be some of the accountants on here could explain better

Hi Guys,

 

Thanks for your thoughts on this topic. I have 2 quotes 1 based on 15,000 PA and the other for 30,000 PA and surprise, the 30,000 one is £82 more a month which means that if I have to stick with the 30,000 PA version of the quotes, combined with the 1st months hire and set up charges it will cost the company over £3,000 more.

 

Also if comparing with an Elegance, the L&K is actually cheaper over the 15,000 option and slightly dearer on the 30,000 option so the theory about the higher spec cars retaining there value far better also appears true if they are lower mileage ones.

Having had a maintenance lease before I'd say go over as if you ever need to revise mileage upwards it'll cost you much more than going higher from the offset. My personal lease almost doubled just for adding 10k so ended up buying the octavia instead.

As above the higher costs should be deductible by your company anyway.

There is also the likelihood your role is likely to increase your mileage, or maybe asked to do business mileage where before you haven't.

If later on your mileage is much less, you can revise down your mileage and payments quite easily.

I have done the number crunching on the quotes received and with the 15,000 PA, 45,000 over 3 years it saves in total £3,135.59 which (all values are ex VAT) and excess mileage is charged at 10p a mile so that means in the unlikely event of exceeding the miles over the lease period, that as long as it is less then 31,355 miles, or 86,355 in total it is still cheaper, that's a whooping great 70% extra miles driven, which given the nature of my job, is highly unlikely to happen. Based on my current mileage which has been around the 36,000 over 3 years, it would work out 240% increase in mileage before it costs as much as basing the lease on 30,000  a year.

 

If we have a fleet of about around 14 cars that I doubt do no more then 15,000 PA, that could save the company around the £40k, not to be sneezed is it?

Edited 28 July, 201312 yr by Graham Butcher

What's the penalty per mile? (usually after 1000 the rate increases significantly)

10 or even 12k is average social domestic travel. Any business use will increase this a lot and it's pretty easy to soon hit and exceed 20k/year.

If you went for the lower rate, and your employer suddenly made you drive abo for work, as you've been told by your manager to get a higher rate would that make you liable if you exceed your lease?

This assumes you would own the car for the 3 years. What if you left in 6 months time and the company handed the car to someone who does 30K a year in miles. They would then be out of pocket by end of year three.

Having standard processes always means a compromise.

What's the penalty per mile? (usually after 1000 the rate increases significantly)

10 or even 12k is average social domestic travel. Any business use will increase this a lot and it's pretty easy to soon hit and exceed 20k/year.

If you went for the lower rate, and your employer suddenly made you drive abo for work, as you've been told by your manager to get a higher rate would that make you liable if you exceed your lease?

The penalty per mile is just 10p a mile, regardless of how many miles are done. I have converted a bedroom into an office so I do not have to leave the house to go to work so my domestic mileage consists of the weekend shopping run and whatever miles I do when on annual leave.

 

The same is true for all of my colleagues across the country and thus I suspect it is highly unlikely that anyone who works smart would need to do 30,000 a year with the exception of anyone doing a national role.

 

As I stated in my first post, I have been driving on average around 12,000 a year in total and in 31 months I have only clocked up 33,600 and projecting the mileage forward to the end of the contract it is going to be only 39,000, well within the 45,000 estimated total mileage. Even if I was to exceed the 45,000 by lets say 10,000 miles @ 10p mile, it is still going to be considerably cheaper then a lease based on 30,000 a year as the calculations will still show a total saving of well over £2,000 over the contract.

This assumes you would own the car for the 3 years. What if you left in 6 months time and the company handed the car to someone who does 30K a year in miles. They would then be out of pocket by end of year three.

Having standard processes always means a compromise.

I agree, but if I were to leave then it is highly likely that my replacement would inherit my car and so their mileage should be broadly similar to my own surely? In todays economic climate shouldn't we all be looking to reduce expenditure as much as possible, unless it impacts on your effectiveness to carry out your duties.

 

It must make more sense to arrange your lease to match as closely as possible to your actual mileage where this is already known from past history. This will vary from area to area and of course what your job entails, in my case this has been around the 13,000 a year and when I arranged the last lease contract personally instead leaving the office to arrange it, I ended up basing it on 20,000 a year, 60,000 for contract and it looks like I'll only do 40,000 or less when the current car goes back in 4.5 months.

Edited 29 July, 201312 yr by Graham Butcher

10p/mile is pretty good if it doesn't increase. Mine was 8p/mile for the 1st 5000 over, it then rocketed to something silly like 40p/mile thereafter. Pretty sure my sister in laws fella pays a similar hefty rate for his BMW as his last hand back cost him over £500 at the end of lease.

10p/mile is pretty good if it doesn't increase. Mine was 8p/mile for the 1st 5000 over, it then rocketed to something silly like 40p/mile thereafter. Pretty sure my sister in laws fella pays a similar hefty rate for his BMW as his last hand back cost him over £500 at the end of lease.

Well I have today confirmed my order, 170PS L&K 2.0 TDI DSG in Petrol Blue and I can honestly say that the quote clearly states Excess Mileage charges of 10p per mile up to 999,999 miles. No mention of anything extra being levied if you exceed this figure.

Agree with above , however if company are leasing the car then the leasing payments will be tax deductible and they will "benefit" more from higher payments- may be some of the accountants on here could explain better

I've not really been following this thread so a bit slow to respond, but any extra benefits paid wouldn't come directly off the companies tax bill or have any true benefit. It would be deducted off the taxable profits. So if the company paid an extra £82 a month, it would only really cost them around £63 a month after the tax saving. But still £2,273 over 3 years. There is a 100% first year allowance (tax write off) on cars emitting less than 95g/km.

I'm not an accountant but unfortunately need to follow all this nonsense to a reasonable level, there may well be a tax advisor lurking that will put me right.