Cash alternative monthly budget calculator
How to use this result
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Remember:
- The car make/model on which you based the company car tax calculations must be the same as the car you plan to buy if you opt out of a company car scheme.
- If the car model you buy is different then the car tax savings and fuel costs calculated will not be valid.
- Our monthly budget calculator takes into account all costs associated with buying/owning a car apart from costs of:
- depreciation
- finance used to buy the car
- servicing, repair and maintenance
You'll need to estimate these costs if you're to make an informed decision about staying in or opting out of a company car scheme.
There are many different ways to buy/finance a new car. Take a look at our examples.
Example 1 – Personal Loan
You buy a car with a list price of £15000. Assume that you pay a deposit of £5000 and finance the remaining £10,000.
Looking at the costs associated with owning your own car, the cash or car calculator has already taken road tax, insurance and fuel into account. This leaves depreciation, service, repair and maintenance, and breakdown cover, and you'll have to estimate a monthly cost for these to fully understand the cost/benefit of opting out.
Service, Repair and Maintenance
The AA Motoring Trust publishes running cost tables every year and these include estimates of pence per mile costs for tyres, service labour and replacement parts costs. Simply take the pence/mile figures for the appropriate fuel type and price band, multiply them by your average annual mileage and divide by 12 to get an estimate of monthly costs. Remember to convert pence to pounds.
Breakdown Cover
Determine the annual cost of the breakdown cover you require and divide by 12 to get an estimate of monthly costs.
Depreciation
Depreciation is how much the car loses in value between the day you buy it and the day you sell it. Our Car Buyer's Guide includes car model specific projected future values (ie depreciation costs) for new cars based on an average 5, 10, 15 or 20,000 miles per year. From the detailed Car Buyer's Guide specification for a new car you are considering, you can select its 'future residual value' to see its projected value in one, two, three, four and five years time at different annual mileage rates. Take the projected value corresponding to your average mileage and the term you plan to keep the car and subtract this from the list price of the car to get an estimate of the total cost of depreciation. Divide this by the number of months in the term to get an estimate of the monthly cost that can be added to the other monthly costs above.
Monthly budget from cash or car calculator | = eg: £600/month |
Minus monthly cost of depreciation, service, repair and maintenance, and breakdown cover (from AA car running costs and Car Buyer's Guide) | eg £245 - |
Minus lost earnings on deposit cash of £5000 at say four per cent per annum over a three-year term, divided by months in the term= £624/36 | £17 - |
Minus total cost of interest, arrangement fees, payment protection insurance, Guaranteed Asset Protection insurance associated with loan of £10,000 divided by months in the term = say £3310/36. | £92 - |
Saving (or cost if negative) compared with company car over a three-year term | £246/month |
Example 2
A BMW 318i over a three-year (36 month) term, 12000 miles per year for a deposit of £1993 and a monthly PCP payment of £443 including payment protection insurance, plus £ 41 per month for service, maintenance and repair.
Monthly budget from cash or car calculator | = eg: £600/month |
Minus cost of deposit spread over months in term (£1993/36) | £55 - |
Minus lost earnings on deposit cash of £1993 at say four per cent per annum over a three-year term, divided by months in the term = £248/36 | £7 - |
Minus monthly cost of pcp including payment protection insurance | £443 - |
Minus monthly cost of Service, Maintenance and Repair plan | £41 - |
Saving (or cost if negative) compared with company car over a three-year term | £54/month |
Important note: the examples given above are entirely fictitious. They are intended purely to illustrate the general principles and don't relate to a specific car model or set of personal circumstances.
Company or Private Car?
In both of the examples above we show a net saving if you opt out of a company car scheme, take the cash alternative and buy your own car. This won't always be the case.Once you've done the sums and established that in your particular circumstances you could potentially save money, you must finally decide if that saving is sufficient to offset any increased hassle or risk associated with buying and running your own car.