Of all the prices you pay during your lifetime, the price of a car can easily be among the highest. Therefore, when the time does come to purchase a new vehicle, you should tread carefully at every stage of the browsing and shopping process to see where savings can be made. You could be surprised by just how much is trimmed off the total price provided that you are seriously determined. Below, we detail three perks that you could find especially cost-effective.
A company car
Initially, receiving a car from your employer can seem a wonderful perk. You get a vehicle that you don’t need to make any initial financial outlay for and, in the United Kingdom, there’s even a great tax break for the car user, as Auto Express explains. However, the company car on offer in your case might not be as financially efficient as it first looks – not least for tax reasons.
The UK tax-collecting authority Her Majesty’s Revenue and Customs – or HMRC – will treat that car as a benefit-in-kind and so tax it at a rate they deem accurately reflects the car’s value. HMRC consider a company car part of the user’s earned income, as the employer effectively pays for it in addition to an annual salary. How much company car tax you have to pay will be affected by the vehicle’s carbon dioxide emissions and your annual salary.
Therefore, as Tax Donut notes, you might actually want to turn down a company car if its emissions are high and a higher salary is on offer as an alternative. When you choose that alternative, the extra money could help you to purchase a low-emissions car for use in place of a company car. This brings us nicely onto the subject of how you can help yourself to make a wise choice of eco-friendly vehicle.
An environmentally friendly car
Another good reason to buy a low-emissions car instead of accepting a less planet-friendly company one is that this could appreciably lower how much you have to pay in VED. This is more properly known as Vehicle Excise Duty and must be paid on any car, even if it is a company one.
VED is payable on the vast majority of new cars from day one. However, all zero-emissions vehicles are exempt in the first year, while low-emissions vehicles with a list price of £40,000 or under stay exempt in subsequent years. Still, even those vehicles where the list price exceeds £40,000 require only £310 in VED payment over years two to six.
This compares favourably with the VED necessary to pay for petrol, diesel or alternative fuel vehicles over the same period. Thus, you could easily overlook that low-emissions cars, which come in electric and hybrid forms, can require larger upfront payment. Your favoured model might even come with a government grant; the BMW i3, for example, includes such a grant of £5,000.
An electric car could also hold its value relatively well over the years, making it ideal to sell for a healthy return later down the line. MoneySavingExpert.com has cited Tesla, one of the most successful companies in selling electric cars, as the third most effective brand in helping to preserve its cars’ value. That value was reported to fall by only 33% per year.
A carefully chosen car insurance policy
To use a car on the roads, it is legally necessary that you have car insurance for it. MoneySavingExpert.com advises you to secure that insurance ahead of becoming the car’s legal owner – as, should anything occur to the car, you will be responsible. Even if you take very good care of that vehicle, you can’t entirely rule out an accident like another car driving into the back of yours just after you have driven it out of the dealership.
If your car has insurance, you could benefit from having a good look around when the time comes for you to renew it. Maybe, when you originally bought that car, it already came with insurance. While renewing the existing policy could seem like the most straightforward strategy, it might not necessarily be the kindest on your bank balance. Furthermore, taking account of policies from different insurers does not have to be as time-consuming as you currently expect it to be.
If you live in the UK, one time-efficient tactic is arranging for an independent insurance broker to pore over different policies on your behalf. Your chosen such broker could be Call Wiser. That company, operating at Andover in Hampshire, can consider what over 30 of the leading UK insurance providers are offering as it searches for the most suitable deal for you. An appealing quote could be sent your way in just 10 minutes when you submit an insurance application to Call Wiser.