Thank you so much Glos Guy. This has given me a lot to think about! I really appreciate it ?
You are welcome Sarah. It’s a big decision.
To illustrate my point about better value being found with the more expensive cars, let’s take two examples. You could choose a car with Motability that retails for say £16k and pay no Advance Payment at all. However, you sacrifice £10k in benefits to run the car for 3 years, so you are paying over 62% of the cost of the car just to hand it back at the end. Conversely, we chose a BMW X1 with a retail price of £37k. The Advance Payment was £2,749 but we negotiated a £500 discount off this (most BMW dealers will do this), so that car would cost £2,249 plus the same £10k sacrificed benefits, so just 33% of the cost of the car. Easy to see which is the better value!
Generally speaking, if you definitely want a brand new car and your only other option is to lease, you will struggle to beat Motability. Those who benefit most from Motability are those who do higher mileages (Motability allow a generous 20k mikes a year) and those for whom insurance would be very expensive (probably applies in your case if you are a new driver).
It is possible in some situations to beat Motability if you have the means to buy a car privately. I have done it, so speak from experience. We ran a VW Tiguan on Motability and a new private BMW 5 Series over the same 3 years. The BMW was a £40k car (£30k base price plus £10k options including a servicing plan) but I negotiated 25% (£10k) discount as a combination of dealer, manufacturer and BMW finance discounts. I therefore had no servicing costs, the only running costs were 2 tyres (£300), road tax was just £30 a year (it would be more now) and insurance was £220 a year. Allowing for depreciation when I sold the car, it cost me the same to run over the 3 years as the VW Tiguan had on Motability and the BMW was a significantly better car that you can’t even get on Motability!
Admittedly many Motability customers probably don’t have the financial means, credit rating or whatever to entertain this option, so if you want a brand new car and it’s a choice between a PCP lease or Motability then the latter will be the winner. Of course, buying and running a second hand car will cost even less, but comes with other risks.