Choosing Between a Company Car and a Car Allowance
For an employee or employer, making the choice between a company car and a car allowance can be difficult. There are many advantages and disadvantages to both. Making the decision that is in your best interest is important. Here are a few advantages and disadvantages for each method, both for the employee and employer.
A company car has the advantage that you do not have to pay for the maintenance and service bills, since typically, the company will cover these expenses. The primary disadvantages are that you do not get to choose the vehicle that you get, and that you will not own the vehicle. There may also be some limitations set by the company in regards to how often you can drive the car and what it can be used for.
For an employee, a car allowance offers the advantages of being able to use your own car, and use it as you decide. Disadvantages include the paperwork that must be submitted to the company and the excessive wear on the car.
An employer needs to consider many issues. Providing a company car provides the advantage of getting large discounts when buying a fleet of cars at once. Also, having control over the maintenance schedule is an advantage. A disadvantage is the maintenance costs. The car allowance has the advantage of not having to buy a car. A disadvantage is the added paperwork and the decision of an appropriate car allowance amount that will satisfy the employer and employee.
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