When you're in the market for a new car as a staff member of the NHS, two primary options often stand out: The NHS salary sacrifice car scheme and buying outright through the NHS car discount scheme.
Each option offers unique benefits, and the right choice depends on your financial situation, long-term goals, and personal preferences.
In this guide, we'll compare both options to help you determine which one is best for you.
Table of Contents
- Buying Outright With NHS Car Discount: An Overview
- NHS Salary Sacrifice Car Scheme: An Overview
- Cost Comparison: NHS Salary Sacrifice vs Buying Outright
- Pros and Cons of NHS Salary Sacrifice Car Scheme
- Pros and Cons of Buying Outright with NHS Discounts
- NHS Salary Sacrifice Car Scheme vs Buying Outright: Which One to Choose?
- Which One Have Most Savings?
- Frequently Asked Questions
Buying Outright With NHS Car Discount: An Overview
The NHS car discount scheme allows you to purchase a car outright, often with substantial discounts on a variety of makes and models.
How It Works:
- Upfront cost : You purchase the car with an upfront payment or through financing such as a loan or a personal contract purchase (PCP).
- Full Ownership : When you buy outright, the car is yours from day one, without mileage restrictions or lease-end fees.
- Big Discounts: With exclusive partnerships with manufacturers, discount providers like Motorfinity can help you save an average of £7,000.
NHS Salary Sacrifice Car Scheme: An Overview
The NHS salary sacrifice car scheme allows you to lease a car with the cost deducted from your pre-tax salary over a period of time. It bundles together essential costs like insurance, maintenance, servicing and breakdown cover.
This NHS car leasing scheme offers fixed monthly payments deducted directly from your gross salary. While this may result in some National Insurance savings, the overall tax implications vary depending on the chosen vehicle and individual circumstances. The potential benefits are more favourable for ultra-low emission vehicles.
This scheme offers significant advantage in terms of convenience, potential cost savings, and access to new vehicles through a simplified, all-inclusive package.
How It Works
- Salary Sacrifice : The cost of the lease is deducted from your salary through a salary sacrifice arrangement.
- No upfront cost : You don’t need to worry about a large initial payment.
- All- Inclusive : Monthly payments cover nearly all car-related expenses.
- Exclusive NHS Discount: The NHS Car Leasing Scheme offers you access to exclusive discounts that are not available through regular leasing companies.
Cost Comparison: NHS Salary Sacrifice vs Buying Outright
NHS Salary Sacrifice Scheme Costs
- No upfront payment : Costs are spread out over time.
- Fixed Monthly Payments: Includes all car-related expenses like insurance and maintenance.
- No Balloon Payment: Once the lease term ends, you simply return the car without worrying about any final financial obligations. This is unlike certain financing options where a substantial lump sum may be required if you wish to keep the vehicle.
Buying Outright With NHS Discounts
- Upfront payment required : Whether you pay cash or finance it, an initial payment is usually needed. (Some dealerships or online brokers offer no deposit deals as well).
- Separate costs: Insurance, maintenance, and breakdown cover usually need to be managed separately.
- Full ownership: The car is yours to keep and sell on as you wish.
Pros and Cons of NHS Salary Sacrifice Car Scheme
| Pros | Cons |
|---|---|
| No upfront payment: You can drive a new car without the need for an initial payment, spreading the cost over monthly payments. | Impact on pension: Salary sacrifice reduce your NHS pension contributions. |
| Convenient budgeting: All car-related expenses are included in one monthly payment. | No ownership: You don't own the car, and at the end of the lease, you'll need to return it. |
| Access to new cars: You can drive a new or nearly-new car without that upfront payment. | Mileage limits: Lease agreements often come with mileage caps, and exceeding them can result in extra charges. |
| No depreciation worries: Since you're leasing, you don't have to worry about the car losing value. | End-of-lease charges: You may incur fees for excessive wear and tear when returning the car. |
Pros and Cons of Buying Outright with NHS Discounts
| Pros | Cons |
|---|---|
| Full ownership: The car is yours without mileage restrictions or lease-end fees. | High upfront costs: Buying outright can require a significant initial payment or financing through a loan. |
| No impact on pension: Your NHS pension contributions remain unaffected. | Additional costs: You must budget for insurance, servicing, and maintenance separately. |
| Long-term savings: If you keep the car for several years, buying outright can be more cost-effective. Additionally, the NHS discount offers significant savings | Depreciation: The car will lose value over time, which could be a financial disadvantage if you decide to sell. |
| Resale value: You can sell the car at any time and recover some of the cost. |
NHS Salary Sacrifice Car Scheme vs Buying Outright: Which One to Choose?
When deciding between the NHS salary sacrifice car scheme and buying outright with NHS discounts, your choice depends on your financial situation and preferences. Here's a straightforward comparison to help you decide.
Consider the NHS Car Discount if:
- You Want Full Ownership : The scheme bundles costs like insurance, maintenance, and servicing into one fixed monthly payment, simplifying your budgeting and eliminating unexpected expenses.
- You Can Afford the Upfront Cost : If you have savings or financing options, buying outright can be a better long-term investment as you avoid ongoing monthly payments and own the car outright.
- You Want to Avoid Pension Impact:: Unlike salary sacrifice, buying outright doesn’t affect your pension contributions, so your retirement savings remain intact.
Consider the NHS Sacrifice Car Scheme if:
- You Want Convenience : The scheme bundles costs like insurance, maintenance, and servicing into one fixed monthly payment, simplifying your budgeting and eliminating unexpected expenses.
- You have a stable job and plan to stay in the NHS: The scheme works best for employees who are likely to stay in their role throughout the lease term, ensuring you can take full advantage of the scheme's benefits.
- You Prefer Driving New Cars : With the salary sacrifice scheme, you can access new or nearly-new cars without upfront costs. At the end of the lease, you can switch to another new car.
Which One Saves You More?
The NHS salary sacrifice car scheme and buying outright with NHS discounts both offer potential savings but save you money in different ways.
The better option depends on factors like how long you plan to keep the car, your driving habits, and financial situation.
With salary sacrifice, the key advantage lies in convenient, all-inclusive payments, as your monthly payment covers almost everything. This scheme also removes the risk of depreciation. However, you don’t own the car at the end, and exceeding mileage limits can incur fees.
On the other hand, buying outright offers long-term savings, especially if you plan to keep the car for many years. There are no ongoing monthly payments once the car is paid off, and NHS discounts can significantly reduce the purchase price. Though depreciation is a concern, owning the car means you have an asset to sell, and it doesn’t affect your pension contributions as salary sacrifice does.
To know more about choosing the right car and car buying option for your budget, explore our comprehensive guide matching vehicles to income levels, with payment options optimised for your annual salary.
Which One should I go for?
In the short term, the salary sacrifice scheme may be cheaper due to convenience.
If you’re looking for long-term savings and don’t mind the upfront cost, buying outright is likely to be the better option. For the best NHS car deals, check out Motorfinity’s special offers.
Frequently Asked Questions
1. Does the NHS salary sacrifice scheme include electric cars?
Yes, the NHS salary sacrifice scheme often includes electric vehicles (EVs). EVs benefit from lower benefit-in-kind (BIK) tax rates, making them an attractive option for you.
2. Can I use the Car for Personal Use?
Yes, the car can be used for both work and personal use. However, any personal mileage will need to stay within the agreed limits of your lease.
3. What happens at the end of an NHS salary sacrifice lease?
At the end of the lease, you can either return the car, renew the lease, or lease a new vehicle through the scheme. You won't own the car.
4. Can NHS discounts be applied to any car brand?
NHS discounts are often available on a wide variety of car brands, including popular manufacturers such as Ford, Volkswagen, Audi, and Toyota. The amount of discount may vary between manufacturers. Browse our car discount section to get manufacturer specific discount information.
Motorfinity
At Motorfinity, we pride ourselves on offering exclusive discount across all makes and models. Whether you're looking for efficiency, style, or cutting-edge technology, our selection is designed to meet every need.
You can choose from Personal Contract Purchase (PCP), Hire Purchase (HP), and leasing deals. Each option provides flexibility and benefits tailored to different driving habits and budgetary needs.
Are you eligible?
Our nations Armed Forces, Veterans, Emergency Services, NHS, Police and Prison Services, the Education and Social Care sectors and more form our eligible audience.
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