Take car allowance or drive company vehicle?

[Mikela17]

When taking a new job in Denver, what would be the best option in your opinion?

#1 - Take the $1,000 (gross) the company will provide monthly for a car allowance and drive something that suits our taste, something we will feel comfortable having our huge dogs ride in. We are hoping to get a Toyota 4runner for around 32,000...hopefully get 2-3 years of 0% APR. That way, if we change companies, we'll still have the car, plus will have something for trade-in when we go to purchase the next car.

#2 - Take the company vehicle and forego the $1,000 (gross) monthly allowance. We would have no out-of-pocket expenses up front and no payments...but we also would not have the opportunity to get the company to pay for part of a vehicle we own, nor would we have a car should we decide this job isn't working out.

Please let me know what your thoughts are or if you have been in a similar situation.


Thank you!

[Beccagold]

Financially, the company car is usually the better deal. That being said, I take the car allowance. I like choosing a car that fits my needs. I understand your wanting the 4runner, but keep in mind with gas prices going the way they have been, you'll have less and less of that $1000 to go towards the car. Also, keep in mind that insurance, maintenance, car washes, etc, will all come out of your pocket.

Good luck on the new job!

[poundwise]

I'd take the allowance and buy something for considerably less than $32K.

[disneysteve]

$1,000/month and you are considering not taking it?!?

I would grab that in a second. If you need to replace your current vehicle, $1,000/month would go a long, long way plus cover gas and maintenance.

I would NEVER, EVER pay 32K for a car. If you really have your heart set on a 4 Runner for some reason, I'm sure you can find a nice used one about 3 years old for far less than that. Don't ever buy a brand new car.

[Ima saver]

I would take the allowance also. I will admit that we never buy a used car, always brand new. (But cars are my husband's passion)

[disneysteve]

Financially, the company car is usually the better deal.

Can you explain why you say that? I can't imagine how getting $1,000/month wouldn't be the better deal. It certainly doesn't cost $12,000/year to have your own car.

[Hedy]

Can you explain why you say that? I can't imagine how getting $1,000/month wouldn't be the better deal. It certainly doesn't cost $12,000/year to have your own car.

The explaination I've heard is that the large number of miles that were logged on the car for a job would have depreciated the car and cost wear and tear to a greater extent that the allowance was worth in the eyes of the person who chose it.

[Mikela17]

See, this is what we are coming up with...which is the better deal? It has been explained to me that the company will cover gas and possibly oil changes (still figuring this one out), regardless if it is our car or their car.

I can't decide if it would be better to take the company car and not have any of our personal money contributed towards a depreciating asset...thus using the money we would be paying on a car to increase our savings & investments...

Then again, by doing that, we would miss out on having $1,000/month to put towards a car...name another time we would have someone contributing 12k/yr towards our car! Then, when it came time to move on (not 100% positive this job is going to work out), we would be left with no car...

So the argument is somewhat - are we we giving up 12k/yr in salary by driving a company car? Or are we actually increasing our income by driving a company car in that insurance, maintenance, wear & tear, and payments aren't ever expenses we have to endure and we can put the money we would be spending on a car in other investments?

[disneysteve]

depreciated the car and cost wear and tear

I understand depreciation, but I still don't see how 12K/year wouldn't be the better deal.

Let's say you pay 18K for the car. There are plenty of nice cars in that price range. The allowance would have the car paid for in 18 months. If you drive 30K/year, you could reasonably expect to have the car for 5 years/150K miles. That means for 3-1/2 years, you'd be collecting $1,000/month free and clear. That's $42,000. No way will maintenance run you anywhere near that much.

[SnoopyCool]

I cannot imagine spending $1,000 per month on any vehicle! Even if you buy a new one, by the time you factor in insurance and maintenance, would it be $1000 a month? (oh, I wouldn't buy a new car either).

You could take the excess of the $1000 and put that away, pay off debt, whatever you need to do with it.

DH has a monthly vehicle allowance, but it is only 10% of what you're being offered (they pay for his gas, too). You should really consider taking the money.

[sweeps]

I agree with the others... $1,000 for a monthly car allowance? I'd be jumping for joy....

the company will cover gas and possibly oil changes (still figuring this one out), regardless if it is our car or their car.

I find that hard to believe, but if it's true, wow that's icing on the cake.

[Beccagold]

$1,000/month and you are considering not taking it?!?

I would grab that in a second. If you need to replace your current vehicle, $1,000/month would go a long, long way plus cover gas and maintenance.

I would NEVER, EVER pay 32K for a car. If you really have your heart set on a 4 Runner for some reason, I'm sure you can find a nice used one about 3 years old for far less than that. Don't ever buy a brand new car.

Steve- Ask your drug reps how much a company car is worth! The average is 15k/year. Usually when provided a company car it covers everything: Car, gas, ins, maintenance, car wash, tires etc. If you live in a high insurance area, its more than worth it. Also, the company will replace the car once its 3 years/60k miles (example). I would find out the details. Also, where will you be driving it to? Each time you get a nick/scratch its upsetting unless the car isn't yours.

I get paid on mileage and average about $1000/mo. For me its worth it, but I've also finished paying off my car, so that helps.

[disneysteve]

How do company cars usually work as far as personal use? Can you use your company car when you go to the mall or the supermarket or down the shore or wherever you happen to be going or do you still need to maintain a personal car for that usage?

[Beccagold]

I've seen it done a couple of ways. 1- the company automatically deducts a specific amount per pay period. I believe this is "tax" on the benefit. 2- Each week or month you enter your mileage into a system. You also state how many of those miles are personal & then you get charged a certain amt per mile.

In my experience there was no limit to how many personal mile you used. I knew people who would drive their company car from the Northeast to Florida.

[LivingAlmostLarge]

Steve the $1K is taxable.