@TAW As @kezo has explained, you are paying a further £8k, on top of the £12k that you’ve already paid, but this time for a much older car. Where Motability works best IMO is if you particularly want to have a brand new car every 3 years, but don’t want to take the depreciation hit. Also, the higher the retail price of the car the better value the scheme becomes, whereas it’s poor value for average to lower priced cars, simply because you sacrifice the same £12k benefits over 3 years (I appreciate that APs vary as well, but not solely down to retail price).
The best way to establish the value of a car on Motability is not to look at the AP in isolation (as many do), but to add the AP to the sacrificed benefits and express that total cost as a percentage of the on-the -road price of the vehicle.
As an example, the best value car that we had on Motability was a BMW X1 2.0 petrol 4WD which, at the time, had a rrp of £42k and an AP of £2,249 (after £500 dealer discount that I negotiated). Sacrificed benefits at the time were around £10k over the 3 years, so the car cost us £12,249, which was 29% of the vehicle cost. Someone leasing a small hatchback through Motability at the same time, with say a £25k rrp and zero AP, was paying £10k total equating to 40% of the vehicle cost. A massive difference.
As the bulk of depreciation happens in the first 3 years (hence why we pay so much to lease them), years 4 and 5 cost Motability very little in comparison. Depreciation in those 2 years, plus servicing and tyres will almost always cost significantly less than the additional £8k that you are paying for the privelige of driving around in what is then no longer a new car, but a 4 or 5 year old one. To me, that doesn’t make sense. If we’ve still got to be sacrificing the full value of the benefits, I’d rather be doing that on a new car, not a 4-5 year old one. Yes, it means another AP, but the AP is the smaller part of the cost of running a Motability car compared to the sacrificed benefits. If someone isn’t bothered about having a new car every 3 years, and wants to keep a car for 5 years, as that costs £20k in sacrificed benefits plus AP, with absolutely nothing to show for it at the end, I would argue that it would make far more sense to opt out of the scheme and buy a nice used car.
Personally, I think that with the massively reduced choice of cars and the ever increasing APs, the scheme now only makes financial sense for those who want an EV. Buying an EV privately (new or used) is not for the feint hearted, given the high up front costs, crippling depreciation, lack of demand on the used market, high insurance costs etc, all the worry of which is taken away from you if you get one through Motability.