Kim – You are quite correct that the Motability scheme isn’t the no-brainer financially that so many people seem to think that it is, especially if you have the financial means to buy privately. This site isn’t entirely representative, as we are all using the scheme so are generally supportive of it, but twice as many people who are entitled to join the scheme decline to do so, which is telling.
I ran a brand new top spec BMW 5 Series privately at the same time as a VW Tiguan from Motability and the two cost about the same to run per year, even though the 5 Series was a far better car. That’s taking into account all costs (depreciation, servicing, insurance, road tax, tyres etc). What Motability does give you is peace of mind, but at a cost. As you correctly identify, the biggest cost by far is the £10k sacrificed benefits. On that basis, the most expensive cars on the scheme make the most sense financially. As you rightly say, the £40k Peugeot will cost you £13k (in sacrificed benefits & advance payments). That’s 32.5% of the cost of the car. Someone leasing a £20k car with zero AP is paying £10k (in sacrificed benefits) which is 50% of the cost of the car. A huge difference
Only you can decide whether or not it’s worth joining the scheme if you think it will be for a short period only. However, to reiterate what others have said, the end of lease purchase prices are way too high for a car that’s sold as seen with no warranty. Basically, they want to deter people from leaving the scheme. If you do join, most insurance companies will honour your No Claims Discount for 3 years and others may take account of your (hopefully) claim free period with Motability.