From April 2002, new company car tax changes will come into force, which focus on the carbon dioxide emissions of a car rather than the number of miles a driver does.
With nine months to go before the tax system is changed, automotive finance providers Singer & Friedlander is warning dealers to be prepared for drivers opting for the cash for car option from their employers and walking away from the cosseted world of company car.
“There is no need for these drivers to be out of pocket or downgrade as a result of the new tax laws, but dealers do need to look very carefully at the budget available to these drivers,” Miles Roberts, S&F Finance assistant director said.
He said a point to bear in mind is that the long-term company car driver could easily have forgotten the financial impact of once more having to budget for servicing, maintenance and MoTs. They will also now have to start considering residual values and the ability to sell the car on or trade their car in.
"Whilst it may be tempting to offer 'creative financing' in order to offer buyers more car for their money with long-term finance agreements over five years, this will not benefit the dealer or the customer. Longer finance deals may result in the customer facing negative equity later, effectively removing those customers from the pool of regular quality car buyers and robbing the trade of some of its most valuable customers," Mr Roberts said.
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