Advance Payments

  • Creator
    Topic
  • #83504 Reply
    theo2017

    hi everyone just wanted some info on advance payments and the reason behind them, im due to place a new order next week and I was looking at the kuga st line edition 1.5 diesel £845 advance payment, now ive done some maths and this is what im stuck with the kuga cost £30.275 our allowance is £61.20 per week over 36 months that’s £8812.80 towards the cost which leaves £21.462.20 left now when ive raised this before with both dealership and motability the dealership say its motability who makes up the advance payments and motability tell me its the dealership who askes for it to cover the difference of cost because our allowance doesn’t fully cover it over 36 months obviously motability sell the cars at auction after our lease is up but I just cant see how there going to retrieve the remaning £21.462.20 for a 3 year old car with 10000 to 15000 miles on it and wear and tear ive had a look at a 2018 kuga st line edition same engine and there asking £19800 for it with 7000 miles on it just don’t add up can someone elaborate for me

    thank you

Viewing 25 replies - 1 through 25 (of 28 total)
  • Author
    Replies
  • #83505 Reply
    Michael Seignot

    Motability don’t pay list price for the vehicles, so the purchase price for them could be much lower.

    #83509 Reply
    Philjb

    Yes nobody pays list price, especially a company as big as motability, I wouldn’t worry they will make a profit.

    #83513 Reply
    theo2017

    Motability must estimate how much the car will sell at auction in 3 years time explains why hence the discount they pay for the vehicles thanks guys

    #83515 Reply
    Marina Brian

    I think they also do not pay the VAT either.

    #83533 Reply
    joss
    Moderator

    Correct no VAT. Don’t worry Theo they do make a handsome profit.

    The Motability scheme

    The Motability scheme
    Published
    December 7, 2018
    Full report
    The Motability scheme
    The National Audit Office (NAO) has found that the Motability scheme1 provides an excellent service to customers, but has long operated in a protected environment, supported by government, which has made maintaining high performance less challenging.

    In its report, published today, the NAO states that Motability Operations – which administers the scheme on behalf of the Motability charity – has made high levels of unplanned profit and holds  more in reserves than other car leasing companies. Furthermore, given its financial model, it is likely to continue to generate significant surpluses.

    The Motability scheme enables eligible disabled people to exchange certain mobility allowances for the lease of a new car, powered wheelchair or scooter2. The Motability charity is responsible for strategic direction and oversight, while Motability Operations Limited is responsible for operating the scheme through an exclusive seven-year rolling contract. The scheme is the only recipient of the direct transfer of mobility allowances from government and received tax concessions worth up to £888 million in 2017. This money contributes to customers accessing lease prices that are 44% lower on average than competitors.

    Joss
    Current car BMW X2 2.0i Sport sDrive Auto 2019 with Sport pack
    Last car Ford Focus Titanium 1.5 TDCI

    "Men fight for liberty & win it with hard knocks. Their children brought up easy, let it slip away again, poor fools. And their grandchildren are once more slaves" - D.H. Lawrence

    #83552 Reply
    WardyGTC
    Participant

    Motability negotiate directly with manufacturers and get a healthy discount.

    They also do not pay VAT.

    So a £30k car is already about £24k.

    Motability set the AP based on what they think the possible shortfall between what the car stands them at and what they estimate it will sell for at auction after 3 years with 60k miles and in average condition.

    Because the majority of customers do far less than the 20k annual mileage allowance and take very good care of the cars they invariably sell for more than they account for and that’s where they make so much profit.

    #83553 Reply
    JS
    Moderator

    Mr Betts is very experienced and the calculations are based on a formula not that different to the very successful lease company he sold. The only difference is Motability don’t give a final payment option at the start of a lease.

    on his departure front it has gone quite, but I for one am all for someone from and experience in the industry, it’s a sad day when a Lord takes over because of his inherited title or a CEO of a failed company just to appease opinions of those that don’t understand or care.  What next ? You can’t have that medication although it’s best for you as it’s more cost effective to have one that ticks the boxes but overall is no help whatsoever (oh sorry we already have that)

    fair play to a British company for being good at what it does and turning a profit.

    rant over

    #83565 Reply
    theo2017

    Thanks WardyGTC

    #83573 Reply
    vinalspin
    Participant

    Also, £61.20 allowance over 3 years comes to £9,547.20 not £8812.80?

    £61.20 X 156 weeks = £9,547.20 + any advance payment, no problems making a profit when they got a big discount on the car and didn’t pay any tax on it either.

    #83614 Reply
    Donkey Oatie

    All motability are funding is the difference between the purchase and the resale price. As mentioned they don’t have the same initial cost so retail price is largely irrelevant. also manufacturers use Motability as a way of controlling stock levels of cars reaching model changes and moving unpopular model variants. which is what annoys some here!!

    #83620 Reply
    Ian

    I do wonder which car on the scheme from a purely mathematical point of view provides best value?

    That is list price minus Ap = x, the X being the value

    #83625 Reply
    Philjb

    That would be the car with the heaviest depreciation, but can that be right? As the Volvo xc40 is really high AP but it must be one of the lowest depreciating cars on the scheme.

    So the equation isnt the same for all manufacturers?

     

    #83630 Reply
    Ian

    I think it’s just simple maths

    car highest list price with lowest AP = best financial value? Might not be best car though….

    Would also be interesting to see the difference at changing price points aswell £15k best value car 25k best value car

    #83635 Reply
    Philjb

    Yes but each car must deprecate  differently, so they are just guessing? As they can only predict the figures.

    My man maths tells me.

    If a car depreciates less they make more profit.

    If depression is unexpectedly high they make less profit.

    So we could only get accurate figures if we know what the depreciation is.

    #83639 Reply
    WardyGTC
    Participant

    Negotiating discounts and calculating depreciation are any leasing company’s prime objectives, their ability to do both tasks successfully is the difference thriving or complete failure.

    Motability have massive advantages over any other commercial leasing company. Bigger buying power, guaranteed payments and above average customers with below average mileage and maintenance needs to name a few. They have no marketing needs as they have a pseudo monopoly.

    Only gross mismanagement could ever see them fail to make a profit. They are obviously extremely conservative when calculating their GFV (guaranteed future value) and this accounts for the large profits that so many feel are obscene.

     

    #83641 Reply
    Bob

    There is no maths to back this up, the cheaper cars are funding the more expensive. Simples.

    If we all got a Tiguan the Scheme would be out of business in a year, you have to factor in the huge costs of Motability Operations, rent, wages, insurances etc not just the cost price v residual price.

    The fact that people choose fiestas and polos make it possible for the Beemers and Tiguans to be on the Scheme.

    #83671 Reply
    ian

    Yes but the cost to us as individual = £9,547.20 + any advance payment.

    Then reduce this from the list price = X

    The higher value X is means a better financial deal?

    I just wonder which car of the 2000 on the scheme it is……….

    #83676 Reply
    Philjb

    Yes I see what you mean best value to us.

    Well mine had a invoice price of £35k plus £2k of options the person who ordered and then cancelled had paid.

    My AP was £2,499 minus £600 discount leaves £1900 add £9,947.20 = £11,847.20

    divided by 3 is a rental of £3,949.06 per year.

    £75.94 per week

    out of this 3 adults are insured

    we all have breakdown cover.

    Free servicing, tyres, glass, road tax.

    Yes only one of us can drive at once, but to add 2 other names to insurance in London would be a good few hundred a year.

     

    Last year my my son in law had a insurance claim and his rental car was from hertz, he had the same vw Tiguan but the base model and it was £68 per day.

    So the scheme for me is a no brainier.

    #83680 Reply
    theo2017

    My mistake sorry vinalspin

    #83705 Reply
    vinalspin
    Participant

    No probs, I’d worked it out the other week and my memory is shot but it didn’t look right, knew it was over 9 grand that’s all.

    #83722 Reply
    Bandit
    Participant

    It’s nice not to have to think about the depreciation hitting you at the end personally. It enables you to go for those wacky colours knowing you don’t have to sell it at the end! Luminous snot green anyone? : -)

    #83724 Reply
    WardyGTC
    Participant

    Bandit, I’m on my 2nd yellow car 😉

    #83738 Reply
    Bandit
    Participant

    Excellent choice. I wish Ford would bring back Daytona Yellow and Purple Velvet, but that’s coz I’m old! Lol

    #83832 Reply
    WardyGTC
    Participant

    Colour choices see getting very boring, any colour you like as long as it’s a black or some shade of grey.
    Obviously manufacturers are responding to customer demand so what’s up with people only buying boring colours?

    • This reply was modified 2 years, 11 months ago by WardyGTC.
    #83862 Reply
    vinalspin
    Participant

    It is annoying that most manufacturers now offer a monochrome range of colours especially on the bigger SUV and similar types of vehicles, it’s like driving round in a 1930’s movie, dull and uninspiring is the kindest thing I can say about it really. ?

Viewing 25 replies - 1 through 25 (of 28 total)
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