Car allowance v company car

**NetSkyBlue** · 05-07-2013, 03:59 PM

Oh gosh, I'd take the company car, no question. And set aside some $ each month until I had enough to buy a car of my own. Then either keep saving it until I left the job and needed to buy a car of my own, or buy it when I had enough, if the circumstances of using the company car don't allow driving it for personal use.

Let the company pick up the bill for the depreciation they're causing by all your mileage. If the car allowance isn't paying for what you need, then how is that a good deal?

edited to add: are you sure you're really buying only as much car as you need? It seems to me you could get a fairly low-mileage vehicle like a Honda or Toyota and you would have only needed at most 2 cars in 10 years. That's 100k in car allowance! You probably could have pocketed $50k just buy getting a boring but dependable sedan, and driving it until the end of its life.

**bjl584** · 05-08-2013, 05:26 AM

I'd take the company car. Let your employer worry about insurance, inspection, gas, and paying for the car itself.

**disneysteve** · 05-08-2013, 05:55 AM

Originally posted by GraemevG View Post

I get 10K per year

Each time I have purchased a car I need to borrow some money to pay for it

The only problem is that I have purchased each car ( second hand with low Km) for around 20-25k and after a couple of years I sell it ... and I only get around 10 k for a trade in so I have had to borrow more money to pay for new vehicle.

Your numbers don't make sense.

You say you get 10K/year from the company and you buy a used car for 20-25K. You keep that car for 2-3 years and then trade it in and get about 10K for it. That means that your cost of ownership was about 10-15K over 2-3 years but during that time you collected 20-30K from the company allowance. You should be making money on the deal but you claim to be thousands of dollars in the hole. Something is missing here.

**MaraJadeC** · 05-08-2013, 09:06 AM

Hello, I'd love to hear updates on this. Thank you guys!

**GraemevG** · 05-08-2013, 08:59 PM

Hi,

Thanks for your replies - justy to make things a little clearer I recieve actually only 8000.00 car allowance sorry for the mistake I talked to the director of finance last night ( my wife) and she advised me of my mistake . So my repaymnets for my loan equate to $6000.00 per year which leaves $2000.00 left for Rego and servicing tyres etc. the issue is that the loan is over a 25 year period because its joined in with my home loan which is at a much lower rate of interest . So after 2 years of repayments ($12000) my loan has only dropped from $40000 dollars to $38000 and thats where the issue is I cant pay off my loan quick enough before i need to get another vehicle .

**snafu** · 05-09-2013, 02:53 PM

10 yr x $ 8,000. = $80,000. + sum of tax credit in benefits
4 cars x $ 20,000. = $80.000.
4 cars x $ 10,000. = $40,000. trade in benefit

I'm guessing you don't understand how a mortgage amortization schedule works; interest is front loaded. Until mid way through the payment schedule you are mostly paying interest. Later you finally make the majority of payment to the principal. Unless you made your regular payment + $ 8,000. to principal, you've been costing yourself a ton of money. Every cent in tax avoidance/credit needed to go as an extra payment directly to principal as well, just to break even.

In all fairness you've had free mileage and free gas for personal as well as work use which has value. Many of us who use our personal cars for work related travel are reimbursed $ .59 per km, IRS allows $ .56.5 per mi.

To answer your question: I suggest you take the option of the company car which has potential to be a taxable benefit. Unfortunately you will have to make some serious extra payments to mortgage if you want to get the principal back to where it was before you chose to add auto purchases and resultant interest.

Car allowance v company car