Is this reasonable?

This topic contains 15 replies, has 5 voices, and was last updated by  vinalspin 1 month ago.

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    Topic
  • #72627 Reply

    Brydo
    Participant

    I was reading the thread about the Kia Sportage and also refer to previous threads about purchasing you motability car at the end of your contract, whether it be 3, 4 or 5 years.

    All KIA cars have a seven year 100,000 miles warranty so purchasing one no matter how long your contract gives varying lengths of piece of mind.

    The fly in the ointment is the price motability ask for the car at the end of the contract.

    What I am suggesting is that the price asked for should be be based on the mid book price for the car and the actual mileage the car has travelled.

    I then suggest the good condition bonus be deducted from the book price and that would be the actual cost to you.

    What do you think?

Viewing 15 replies - 1 through 15 (of 15 total)
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  • #72631 Reply

    Robert

    Brydo.  Not only do Kia give a 7 year warranty on new cars, they also give the full 7 year/100000 mile warranty on approved used Kia second hand cars up to 18  months old.

     

    #72633 Reply

    JS (justsaying)
    Moderator

    The purchase price should be set from the start of the lease irrelevant of mileage. Motability charge the AP based on a formula expecting the vehicle to be a set amount after 3 years, just like a purchase/lease company they charge you set amount per month yet you know the final payment should you with to keep the vehichle. It’s wrong for Motability to take advantage of the lower mileage users and benefit further.

    #72660 Reply

    Georgie

    While I’m grateful the GCB has risen to £500 (which is the only reason I can afford the £500 AP on my next car), JS makes an interesting point: My brother received the GCB last year for his Golf which had 58,000 on the clock, whereas my current Car’s going back with less than 6,000 on the clock.  Somebody’s going to be very happy – I’d like to think the extra money from low mileage resales will go towards reducing APs, not Company Profits.

    #72666 Reply

    Littledave

    Motability will get less for the 58000 mile car than your 6000 mile car. Swings and roundabouts.

    #72667 Reply

    JS (justsaying)
    Moderator

    Very true littledave however Motability set the AP with all costs taken into account and aim to make £1000 per scheme vehichle, irrelevant of mileage there is no reason why Motability can’t give a final payment figure at the beginning of the lease. (And guaranteed to make £1000)

    #72684 Reply

    ChrisK
    Participant

    I wonder how it works with the VAT when the car is first bought because they get a big discount off the car through the tax break then make a profit on the car because the car is sold at market rate on the day or at the same rate as Mr Joe Public sold his car for after 3 years but having paid thousand’s in VAT when he bought the car brand new.

    Or do they have to pay the VAT back or part of after they sell the car 3 years down the line.

    Does anyone understand that or am I getting it wrong somewhere.

    #72899 Reply

    Littledave

    If they are able to reclaim the Vat on purchase, then they must charge it on sale.

    #72973 Reply

    ChrisK
    Participant

    If they are able to reclaim the Vat on purchase, then they must charge it on sale.

    The trouble is if you buy your car from Motability at the end off lease they give you a lump sum and no invoice (they say your bank statement is your invoice) so you don’t know what your paying for other than the car.

    I will try and explain as this is how I see it but you may see different?

    Motability buy a VW car, it cost £20,000 plus £0 VAT

    Joe Public buys same VW car, it cost £20,000 plus £4,000 VAT

    Not taking deprecation, mileage or condition into account Joe sells his car 3 year later at a % of the overall price of £24,000 so lets say it’s value now has dropped 50% so he’s looking for £24,000 – 50% = £12,000 as this is a car that was worth £24,000 brand new including VAT, not the VAT the second buyer pays but the VAT the original buyer paid that’s built into the first buyers valuation of the car that cost him £24,000 regardless of what other taxes are paid when the car was new.

    Motability sell the car at the same time and there asking £12,000 because that’s the going market price but Motability did not pay the £4,000 VAT in the first place but their gaining because they sale at the common market price on the day.

    To try and put it simply they bought a £24,000 car for £20,000 and selling it on with that original VAT still built into the market price.

    I don’t know how the taxes work with the profit that comes from the none payment of VAT, do they keep it or do they have to give that back to the taxman?

    The dealer now has 2×3 year old VW’s that he sales for £12,000 plus VAT on his profit only plus their commission and overheads and only adds VAT on the profit on him buying and selling the car so technically there is very little VAT on the second-hand price because the second-hand cost for the buyer has the original VAT built in.

    #73002 Reply

    Wonky

    Hi all,  confusing to say the least.

    In Chris’s example above,  if Motability sell us the car for £12k, isn’t that really,

    £10k plus £2k vat, which goes to taxman?

    Help!  Any accountants reading this?

    Regards, wonky

     

    #73034 Reply

    Jack

    They get more than the VAT off a car, the invoice for our 68plate Kuga ST Line X was £18k and the RRP is £31k!!

    #73038 Reply

    vinalspin
    Participant

    As far as I knew second hand cars aren’t classed as commercial vehicles so don’t attract the +vat aspect, could be wrong but I know a couple of people that have bought ex Mota cars and there was no vat to pay.

    #73041 Reply

    wonky

    Hi,   Vinalspin,  many things we buy everyday don’t say vat but do include vat.  A mobile phone or a set of pans you buy for £100. this will show as £83 plus 20% vat on the dealers paperwork. ( to within a few pence, )

    Regards, wonky

    #73048 Reply

    ChrisK
    Participant

    That was my point about when I bought my previous car from Motability, Motability just said my receipt was what was on my bank statement so don’t know what I paid in regards to taxes, if anything and only paid what they asked for and as we know, it’s a take it or leave it lump sum price.

    If my assumption are correct then maybe this could be why Motability Operations build up a big money reserve without noticing it, nudge, nudge, wink, wink. 😀😀😎

    Or could be like wonky said and the second buyer and that buyer only pays the VAT on the market value of the original VAT exempted car at the end of lease and that would go back to HMRC. If the second buyer sales in future the car would be back to a VAT paid status and would collect no more VAT.

    #73070 Reply

    Wonky

    Hi ChrisK,  yes agree,   Or are we missing something?

    If Motability are exempt from paying vat because of their charity status, does that mean they don’t have to charge vat on sales as other businesses do?

    All very confusing and will we ever find out.?What is known is , they can get a £30k car for nearer £20k with discounts and vat exemption, then £9k from us in lease ,  fleet insurance and tyres and very minimal service ( which is a disgrace and another topic). So all in all we know why they have a big bank balance even after paying top notch salaries and perks.

    Regards,  wonky

    #73089 Reply

    vinalspin
    Participant

    Hi Wonky, I appreciate that VAT might be included in the 2nd hand price but the paperwork doesn’t reflect that, I have bought many 2nd hand cars but don’t remember seeing vat on the receipt, might just be selective memory?

    Still doesn’t tell us if mota pay a tax bill for the sale tho does it? somebody must know how it works?

Viewing 15 replies - 1 through 15 (of 15 total)
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