So, here’s the scoop – I’ve got a personal lease on my electric car, but I’m thinking about switching to a company car. I make over £65,000 a year and call Scotland my home sweet home.
With 12 months left on my lease, I’m shelling out £745 a month for everything (lease, insurance, and charging). On the bright side, I get a £450 car allowance (pre-tax), which shrinks down to around £250 after the tax man takes his cut. I also get reimbursed for business miles at 15ppm, raking in about £270 a month on average. After taxes, that puts me at just over £500 extra cash from the company each month.
I’m a bit fuzzy on the specifics, but I’m guessing the benefit in kind or monthly cost for the company car would be around £50-80.
If I stick with my current wheels for the next year, it’ll cost me a whopping £9000. Yikes!
Here’s where things get tricky. I could bail on my current car with an early termination fee of £3200, plus an excess mileage charge of around £2500 (I’m thinking of paying that off in chunks if possible).
Good news – I have a credit card offering a 0% money transfer for 12 months with a balance sitting pretty at £0. I could snag £3500 for a year.
Is it a smart move to cut ties with my lease early and snag a company car?
In the grand scheme of things, it seems like the way to go – but I need a savvy opinion. Help me out, Money Minder! Thank you!
Cheers,
Driven Decision Maker
Response from THE MONEY MINDER:
Hello There,
Based on the detailed breakdown you provided, it seems like cutting short your lease to get a company car might indeed be a financially beneficial decision in the long run. While it may involve some initial costs and considerations, such as the early termination fee and excess mileage charge, the potential savings over the remaining 12 months could outweigh these expenses.
Before making a decision, I recommend calculating the total cost of continuing with your current lease for the remaining 12 months versus transitioning to a company car. Take into account not only the immediate costs but also the potential benefits in kind and overall savings. It might be helpful to create a detailed budget projection to compare the financial implications of both scenarios.
Considering that you have access to a 0% money transfer option from your credit card, borrowing a manageable amount to cover the termination fees could be a practical solution. However, make sure to assess your ability to repay this borrowed amount within the specified timeframe to avoid incurring any additional costs.
In the end, the decision to cut short your lease and opt for a company car should align with your overall financial goals and needs. It’s essential to weigh the immediate costs against the long-term benefits while considering your income, expenses, and tax implications. If you’re unsure about any specific details or calculations, consulting with a financial advisor or accountant could provide you with valuable insights and guidance tailored to your individual situation.
Best of luck with your decision-making process, and feel free to reach out if you need further assistance or clarification.
Farewell from THE MONEY MINDER.
