Employers and employees across the UK will be familiar with the conundrum of the company car vs. the cash alternative – and whichever boat you’re in, it’s important to arm yourself with all of the relevant info before committing to a decision.
Whether you’ve heard that company cars mean zero maintenance on your end or prefer the idea of spending the cash on a model of your own choosing, there are undeniable benefits to both options – and today, we’re breaking down the advantages of each to help you take the next step with complete confidence.
Why take the cash?
More and more employers are giving their staff the opportunity to pick a cash alternative (otherwise known as an ‘allowance’) in favour of the company car.
The size of this cash alternative can vary based on the tax laws in your country and how the allowance is calculated by your employer – but this should, naturally, work out an an approximate equivalent of the company car’s value.
If you’re considering the cash route, remember to speak to your company’s payroll department in advance to find out exactly how much money is on the table before you move forward with this option.
Whatever the amount, this will usually be paid on top of your salary – meaning it will be subject to income tax – so it’s worth noting that you’ll end up with less to spend on a car of your own, versus the value of the company car.
So, what are the incentives when it comes to the cash alternative?
1. Unlike a company car, taking cash that can be used to buy your own vehicle privately means the car will be yours – rather than essentially being a rental.
2. When you buy privately, you’ll have the opportunity to choose whichever model you want – while company car schemes are generally restricted to estates and sedans.
This way, you can climb inside something more unique or adventurous – like an SUV, coupe or crossover – depending on your needs and personal tastes.
3. Particularly in the UK, employers will often discourage their employees from picking gas-guzzlers – instead pushing for a lower-powered, more fuel-efficient alternative.
If you’re looking for something a little more formidable, asking for the cash will mean you can put it towards a car that suits you – regardless of what’s under the bonnet.
You may find that the cash allowance won’t cover your model of choice – but that doesn’t have to be a problem. A hire purchase agreement could help you to drive the car you want at an affordable monthly rate, with the added bonus of owning the car once your loan has been repaid.
Naturally, bad credit car loans come with higher APRs (and therefore greater monthly repayments) – but as long as you’re in a financial position to repay regularly and on time, getting approved shouldn’t be a problem.
Why take the car?
If you’re in the lucky position of being offered a company car, you’ll find that this option comes with plenty of its own perks – not least the fact that you’ll get a complimentary set of wheels you can use during and outside office hours.
So, why do so many people choose the car over the cash?
1. There’s no denying that a company car presents an easy solution to employees in need of a vehicle they can drive on a day-to-day basis.
The leasing company in question will take care of road tax, insurance and registration – leaving you to sign where necessary and start driving. Better yet, servicing and maintenance will also be covered under the lease agreement – saving you additional money and hassle.
2. With a company car, you’ll get access to premium models from luxurious brands like Mercedes, Audi and BMW – giving you a chance to own a stylish, well-equipped and fuel-efficient exec that may otherwise have been beyond your budget.
3. The vehicle’s depreciation and resale value won’t be a factor for you, as you’ll never own it – and most company car schemes mean you could end up with a shiny new model every two or three years.
4. Certain car finance deals are subject to limits on mileage – which can be restrictive if you cover long distances regularly – whereas this won’t apply when you opt for a company car
If the idea of never owning the vehicle outright isn’t a deal-breaker for you, company cars make for a tempting concept.
Don’t forget to take the emissions tax into account, though – as this will likely play a part in the decision-making process, when it comes to the model you find most appealing.
Whichever way you’re leaning, the key is to do all of the necessary research before opting in – ensuring that you find the most practical, economical and attractive prospect for you.
Author: Tori Atkinson is a motoring blogger for The Car Loan Warehouse, providing competitive car finance deals to suit any and all circumstances.