NHS Car Leases - any good?

R.O.S.S.I

R.O.S.S.I

R.O.S.S.I

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My partner is a midwife at a local NHS trust and has been for several years. We've had the same car for about 10 years which is serving us fine but I have just got a new job which isn't remote so I will need to commute and a car is probably the easiest way of going about it (I am going to give cycling a try first) as public transport isn't the greatest to get to my destination.

Anyway, we got on to the topic of purchasing a second car and she mentioned she could get a car through the NHS lease scheme. I know this will end up being some kind of salary sacrifice from her salary but are the deals that they get through the NHS any good? Are there any things to be wary of? Or can you get just as good deals through private lease companies?

I'd be half tempted to just buy a car outright (something in the £5-8k region) rather then get it on a lease of sorts however the hassle free element of something like that does appeal.

I have read that they try and push you to an electric car, which just wouldn't be possible for us due to where we live (house doesnt have its own drive and is set back from the main street so not sure how we would be able to charge it whilst at home). Is this true or can you still get petrol and diesel cars through them?

Anyone any experience of this?
 
It depends on how much she can take a hit on her pension. I use NHS lease and am fine with the hit because I would normally spend about £25k on a used car and watch it lose £12 - £15k over 3 years not to mention insurance, tax and servicing. Now I can lease a new car for the same price and I get the insurance, tax and servicing paid for. So all in it saves me money now but my pension takes a hit.

I would look at EV lease as they are significantly cheaper.

If your usual car price is £8k and you are happy with that, then leasing would be more costly both short and longer term.
 
The ding to your pension is monumental so you need to do some mega man maths to make a shiny bit of metal seem good value. Also anything other than an EV will have mega tax and simply not be worth it.

So no, bad idea. Your other idea is much better - 8k and be done.
 
tamzzy said:
what the others said
salary sacrifice for NHS vehicle leasing is very poor value for anyone earning under 100k p/a
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That’s not remotely true. It’s good value from about £30k and up because a band 5 can get a 3 year lease on an MG4 or a Nissan Leaf for about £260 per month with 10k miles. That includes insurance, tyres, servicing and a home charger and zero initial payment. If you are a midwife then you are higher than a band 5 and the same car will have even lower monthly costs.

Not many people have disposable income to buy a used car for £5k - £8k without some form of finance (not saying this is the case for the OP). You also accept that your cheap runabout has no manufacturer warranty and probably has high very mileage and could end up costing hundreds to maintain every year.

So for £9k over three years you get a new car with full warranty, no high interest payments, including servicing, tyres and insurance costs.
 
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It costs way more than £9k though, you need to factor in the (significant) ding to your pension which is also index linked. It will literally continue to cost you money until the day you die.
 
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ICDP said:
That’s not remotely true. It’s good value from about £30k and up because a band 5 can get a 3 year lease on an MG4 or a Nissan Leaf for about £260 per month with 10k miles. That includes insurance, tyres, servicing and a home charger and zero initial payment. If you are a midwife then you are higher than a band 5 and the same car will have even lower monthly costs.

Not many people have disposable income to buy a used car for £5k - £8k without some form of finance (not saying this is the case for the OP). You also accept that your cheap runabout has no manufacturer warranty and probably has high very mileage and could end up costing hundreds to maintain every year.

So for £9k over three years you get a new car with full warranty, no high interest payments, including servicing, tyres and insurance costs.
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This is so dangerously short sighted.
 
R.O.S.S.I said:
I have read that they try and push you to an electric car, which just wouldn't be possible for us due to where we live (house doesnt have its own drive and is set back from the main street so not sure how we would be able to charge it whilst at home). Is this true or can you still get petrol and diesel cars through them?
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This isn't the car leasing company "pushing you". This is the tax implications. Having a car on salary sacrifice is classed as a benefit in kind. The BIK company car tax rates for BEVs used to be zero once upon a time, but they govenment has realised they'll be out of pockets by billions if they allow electric vehicles to continue to benefit from tax breaks so that got reigned in.

I believe it's 2% currently, but is due to rise to 5% by 2027.

But for conventional fuel vehicles ? it's a sliding scale all the way up to 37% based on CO2 emissions. Make sure you factor that into your maths.

A lot of the feedback above is about leasing in general. If you never "buy" a car and just lease one, you're spending 300 + quid a month and have literally NOTHING to show for it, as you're just paying to borrow somebody elee's car. Leasing does not in any way make financial sense, especially as others have mentioned due to loss of pension contributions too.

If you want to throw 300 + month down the drain so you can have a nice new car with no hassle, then do so. People can quite easily spend that sort of money on lifestyle, spending thousands on fancy mountain bikes, or going out and spending hundreds of pounds on food and drink on nights out every weekend. If you want to spend it... spend it But leasing is never good financial sense.

If you do want to lease and are happy throwing that money down the drain to have a nice new car with zero hassle, the NHS leasing scheme isn't a bad deal as lease deals go. You're not getting super duper discounts from the NHS that make it amazing and cheaper than you could get anywhere else or anything, as others have said, if anything you can get better lease deals elsewhere.

But if you want to do it, you'll probably have a good experience with it. My wife works for the NHS also, and lots of her colleagues use the scheme and love it. Just go into it eyes wide open that you're paying for the nice shiny new car and convenience, it's not about making great financial sense.
 
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tamzzy said:
Hurts on the pension though. Compounding interest and all that...
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dLockers said:
This is so dangerously short sighted.
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OP - Please head mine and these warnings, it is a significant hit to your pension which is literally the only perk of the job at this point. When the pension scheme is as 'generous' as it is (lets face it, the pay isn't), you want to be doing everything you can to maximise the benefit. Taking on a salary sacrifice car lease is doing the exact opposite.

The NHS pension is based fixed % of your salary over your employment which is built up each year (and indexed/increased with inflation). By taking a salary sacrifice car, you are significantly reducing your salary and hence your pension. The reduction to your salary (which is used to determine how much pension you get) is not the net amount you pay for the car but its the gross amount before tax listed on the quote which is significantly higher.

The example above may 'only' impact your pension by £450* but that's £450* for every year until you die which could be 20 years. That is an incredible amount of money to pay for something you stopped benefitting from potentially 3 decades previously. That also only covers that one lease for 3 years, if you did it twice, then it compounds and that's £900* a year and so on.

*this number WILL be bigger because it needs to be increased by inflation each year. For example if you lost £450 of pension in 2003 that would now be costing you £768 per year.

For your rank and file NHS staff, the lease scheme needs very careful consideration unless the NHS are significantly contributing towards it because you do business miles. Or this:
tamzzy said:
This.
Only makes sense for the bosses who have maxed out their annual allowances.
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As I posted earlier you need to look at what your current car costs are. For someone usually buying a £5k - £8k car as a runabout, then no it is not a viable option. Also as the OP said an EV is not an option then normal ICE cars are not much cheaper on NHS lease schemes and a total waste if money.

The hit on a pension needs to be considered and compared to the savings and that only makes sense if you normally pay a lot more for your cars using normal finance options. In the example of someone paying ~£25k for a new or used car every 3-5 years, then the savings may offset what you lose on the pension.

A car is not an investment and for most people they are perpetual money sinks year on year. If you “buy” your own car you need to factor in depreciation, servicing, maintenance, insurance, tax, interest on payments. All of these have annual costs sometimes well in excess of many thousands of pounds. The people posting about hit to pension seem to lose sight of that fact and only focus on the pension hit, not the other savings you can make year on year over 20 years of your working life.
 
ICDP said:
As I posted earlier you need to look at what your current car costs are. For someone usually buying a £5k - £8k car as a runabout, then no it is not a viable option. Also as the OP said an EV is not an option then normal ICE cars are not much cheaper on NHS lease schemes and a total waste if money.

The hit on a pension needs to be considered and compared to the savings and that only makes sense if you normally pay a lot more for your cars using normal finance options. In the example of someone paying ~£25k for a new or used car every 3-5 years, then the savings may offset what you lose on the pension.

A car is not an investment and for most people they are perpetual money sinks year on year. If you “buy” your own car you need to factor in depreciation, servicing, maintenance, insurance, tax, interest on payments. All of these have annual costs sometimes well in excess of many thousands of pounds. The people posting about hit to pension seem to lose sight of that fact and only focus on the pension hit, not the other savings you can make year on year over 20 years of your working life.
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NHS folk can still lease a car without the double ding of losing money now and for the rest of their life.
 
We haven’t lost of anything, we just understand how the pension and compound interest works in the real world.

If you lease an ICE car, the up front ‘savings’ are actually negligible because of the BIK (which is applied to an £lol list price) and you still take the significant hit to your pension.

A fiesta is a >£20k car and attracts up to 30% BIK these days and adds £1200 in tax to pay at basic rate.

We know that people have been leasing very expensive EVs via the scheme that they otherwise wouldn’t never have been close to be able to afford. That’s why we say ‘approach with caution’.

The gross amounts on some of these cars is north of £10k a year. For your rank and file band 5 or 6, that wipes out 1/3 of the pension you would have accumulated for that year.
 
Thanks for all the replies, definitely worthwhile thinking about the impact on pension contributions. I hadn't really considered that.
 
R.O.S.S.I said:
Thanks for all the replies, definitely worthwhile thinking about the impact on pension contributions. I hadn't really considered that.
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Just to be clear, it impacts your contributions right now, but in 20 years you could be DRASTICALLY worse off. Like, you've sold your future security for a Tesla worse off.
 
b0rn2sk8 said:
We haven’t lost of anything, we just understand how the pension and compound interest works in the real world.

If you lease an ICE car, the up front ‘savings’ are actually negligible because of the BIK (which is applied to an £lol list price) and you still take the significant hit to your pension.

A fiesta is a >£20k car and attracts up to 30% BIK these days and adds £1200 in tax to pay at basic rate.

We know that people have been leasing very expensive EVs via the scheme that they otherwise wouldn’t never have been close to be able to afford. That’s why we say ‘approach with caution’.

The gross amounts on some of these cars is north of £10k a year. For your rank and file band 5 or 6, that wipes out 1/3 of the pension you would have accumulated for that year.
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The scheme limits the cars available to lower bands so you won’t get a band 5 picking a Taycan or fully kitted E-Tron GT.

Like I said, it works for many people like myself who would purchase used every 3 years at a cost of £25k and been used to £2k - £3k per year depreciation before you even factor in the insurance etc.

I know how compound interest works and I also know that the up front costs (for an EV) are a lot less than purchasing directly or for a HP payment plan. In the 3 years I have used the scheme I have seen my monthly car costs drop and amount to ~£3000 per year. All of which goes in to my savings or other investments.

I already said the OP should avoid, but the constant “but the pension” is ignoring the significantly reduced up front costs. There is also the option to get these on a lease that does not impact pension.
 
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Looked into it (not too deeply) for my wife, seemed to be quite a limited choice (a lot of EV which isn't suitable for us) and/or expensive. Annoyingly they tend to be behind login walls making it harder to do proper research and comparisons. Decided to just buy a hybrid instead.
 
The scheme is avaliable for me and a fair few have been getting EV's.

I'm trying to wrap my head around it pension wise.

Is there a simple way to work out the effect? Say for a 3 yr lease?

I've always had a vehicle provided by work but they are taking that away with very little notice so I'm in a tight spot for getting to work but I'm very mindful of it having an effect on pension, I'm on a decent LGPS.
 
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