Car Allowance vs Company Car

What to choose?

This is a common dilemma. My company is offering me a company car or a car allowance. Which do I choose?
To be able to determine which will be better for you, you will need to collect the following facts about the car
allowance and the company car.

Car Allowance

  • What is the car allowance offered?
  • Do you get a fuel card on top of the allowance or is the allowance meant to be used to cover the running expenses of the vehicle also?
  • What is the expected amount of kms per year you will need to drive for work purposes?
  • And what is the % kms of your total driving that will be for work?

Company Car

  • What is the value of the car you will be getting?
  • Is the car what will suit your work AND lifestyle?
  • How often will it be renewed?
When you have all these facts together you can compare which is better. For example, if the car allowance gives you better buying power than the company car then you would probably want to go for the car allowance. Furthermore, even if it gets you the same value of a car using the car allowance you still would want to go for the car allowance because you OWN the vehicle. You can sell it later and get some cash back etc. Whereas in the company car you have to give it back to the employer, they will then sell it and keep the cash for themselves. If you would like GoNovated to help you compare if getting a company car or car allowance is right for you, feel free to contact us!