Who Is Eligible For a Company Car?
Having a company car is an attractive perk that many workers hope they too can enjoy. But what types of jobs give you a company car? To start with, it depends on the employer, but usually it’s a job an employee is expected to perform with a certain degree of regularity. Jobs like sales, HR and asset management are common jobs that might have a company car attached.
Higher-level executives and certain sales personnel may be offered a company car because part of their job requires them to be on the run and their own car might be too cumbersome to use. Furthermore, a company car is often viewed as a quality way for the company to demonstrate a certain level of trust in the employee by making sure they have a safe and dependable means of transport.
How Does a Company Car Work?
The logistics of a company car work differently depending on the company. Generally, though, a company car can either be owned and maintained by the employer, or they can be leased. Employees assigned with a company car may be required to also cover fuel and other related expenses, while in other cases the employer might cover all related costs. Additionally, some employers require that the car be returned at the end of the employment period, while others may allow the employee to keep it.
In terms of tax, depending on the country, company cars may be taxable or not. If a company car is deemed a taxable fringe benefit in the employee’s country of residence, it’s the employee’s responsibility to pay the taxes due. It may be a good idea to consult a tax advisor to ensure you’re aware of the implications.
Benefits of Having a Company Car
A company car can offer numerous benefits to the employee. Besides saving money on car maintenance and saving time by not having to drive all the time, company cars are often a statement piece that shows the employee’s status and importance in the company.
Betty Price, a career consultant who’s worked with companies on employee needs and retention, says that company cars are useful in terms of instilling confidence in the employee and providing a sense of security. She continues to explain that having a reliable means of transport to reach clients, suppliers, vendors and other stakeholders makes it easier to build relationships, which in turn can help the employee progress in their field and achieve more success.
Pitfalls of Having a Company Car
On the other hand, having a company car is not all roses and sunshine. For example, depending on the country, company cars may or may not have special legal implications when it comes to taxation, and the employee could be liable for certain taxes.
Furthermore, for the employee it might mean having to use up more of their personal time in order to maintain the car, as well as having to invest time in learning about car maintenance and repairs. This might mean spending money on learning about car repairs that could have been put towards something else.
Additionally, certain jobs might be hard to enjoy if the car is cluttered with items that belong to the company. For instance, having a salesperson drive to a client location without their necessary materials due to a cluttered boot could end in frustration and an added financial cost.
Factors to Consider When Choosing A Company Car
When it comes to determining the right car for the job, there are many factors to consider. It’s important that the car chosen is the right fit for the job, and can perform the necessary tasks it’s expected to.
Another factor to consider is the monthly running costs. The car should be reliable enough to save on potentially expensive reparations and to save on fuel. The fuel economy should also be factored in, as this has a direct impact on the running costs as well as on the environment.
Finally, the safety rating should be thoroughly analyzed. After all, the company car is a tool for the job, and should be considered as such. It’s important that whatever car the company decides for the employee has been tested and is up to standard in terms of safety.
Insurance For Company Cars
Another important aspect to consider when it comes to owning and driving a company car is the insurance. Usually, employers will arrange the necessary insurance, but it’s always important to check the policy and understand what is covered and what’s not.
In many cases the insurance policy will extend to the employees and their dependants when using the company car, but understanding the terms and conditions are essential in making sure that everybody is covered adequately.
In the event of an accident, it’s also important to check whether or not the company car is covered by the insurance. It’s necessary for the employee to understand their legal obligations and whether or not they would be held liable in the event of an accident.
How to Get Maximum Benefit From a Company Car
Having a company car can be a great perk, but there are some things to consider when making sure that employees get the maximum benefit out of it.
Firstly, employers should make sure the company car is delivered in good condition, has a full tank of fuel and is regularly serviced to prevent any mechanical issues.
The insurance policy should also be carefully checked to make sure all the necessary factors are covered. Additionally, the employee should be clear on how the car is to be used, as well as the consequences if the company car is misused or if the policy is not followed.
Company Car Financing Options
Depending on the company, different financing options for a company car can be available. The most common form of financing is usually leasing, where the company pays the financing company and the employee makes “payments” through deductions from their salary.
Something to consider is that usually leasing contracts can contain additional restrictions that might affect the employee, such as limited mileage and restrictions on business and personal use.
Alternatively, some companies opt to finance or purchase the car and then let the employee pay for the maintenance costs and fuel, meaning the employee has full control over how the car is used and how much money is spent on it.
Pros and Cons of Having a Company Car
Overall, having a company car is a great opportunity, but it comes with responsibilities. Some factors to consider include making sure the car is regularly serviced and that the insurance policy is in order.
On the other hand, having a company car can be a great way to save money on car maintenance, make a statement and build relationships with clients and vendors. Furthermore, it can make it easier to reach remote locations and remove the need for public transport.
In the end, having a company car is a great deal that can offer numerous advantages if it’s used properly and both parties have understood the benefits and risks.
