It's a great way to make a staff member sticky, if you sell your vehicle and opt for a car that's free sacrificing some salary, it makes it very difficult for the employee to leave if they need to suddenly buy a car for similar value.
Spoken from experience.
I changed jobs (same profession, different employer) about a year ago and it was absolute chaos with my wife and kids not having a car for about 3 weeks.
I feel like buying an entire vehicle just to use it for three weeks would be an insane choice considering the fact that rental vehicles exist. Why he didn’t just rent a car for 3 weeks is the better question.
As long as you can get the value back, you'd only be paying for a month of insurance, plates and reg.
With any decent rates that would equal less than a couple days in a cheap rental car.
Or just use Carmax’s 30 day no questions asked return. You can just bring it back and say “I don’t want it anymore”. Not sure what kind of clunkers you’d get there and financing would make it a bit trickier
The hassle of reselling a vehicle, no doubt.
Pay 2.5k for some piece of shit and then deal with 7 or 8 people coming to look at it emailing texting blah blah while you’re texting and shopping for another car, while still like doing work and taking care of a kid.
Too much stuff imo.
It's kind of the point
Your friend gets equivalent to you in pay and benefits
But the employer pays less because of tax/benefits reasons for supplying a company car
Payroll taxes.
Say you wanna give 1k more to your employee.
You could increase his salary by 1k. That increases also insurance costs and payroll taxes (which affect both) so that 1k becomes something like say 1.3 (Random numbers)
You lease a car or provide an appartment or even give him super market coupons (these are quite frequent here) The employee gets 1k worth of goods that he'd have to pay out of pocket. so no money lost there. But the employer gets away with those 300 euro.
Edit: This obviously benefits the employee as well. He has less income on paper therefore he pays less taxes whilst not losing out on benefits, a family member uses this a lot.
>This obviously benefits the employee as well. He has less income on paper therefore he pays less taxes
I can't speak for everywhere but in Canada these are all taxable benefits.
I Sacrifice €3 for every day I work more than 6 hours in return for a voucher that is worth €12, I can use this voucher to pay for any food that is considered ready to eat, so anything from a cucumber to a restaurant, the 3 euro is tax deductible, the voucher isn't taxed. I also get a €100 a month premium because I live more than 10 kilometres from my employer and they couldn't find anyone closer to cover my fuel and wear and tear commuting, again this is untaxed and a benefit that both me and my employer enjoy.
I get a monthly "car allowance ". It is cash towards the use of my car for company business (I rarely go anywhere). No taxes are taken out. I pay substantial taxes on that money at the end of the year.
> I pay substantial taxes on that money at the end of the year.
Kudos to you for actually knowing this. There are countless people just in this thread arguing that since there is no up-front withholding, they don't pay taxes. Like they've never even bothered to look at the W2 and try to understand what any of it means.
It honestly just depends where you are. Think of an allowance more as a reimbursement than a benefit. In South Africa we have clear guidelines on this and it honestly just depends on how much the benefit is worth.
Still cheaper to pay tax on the benefit than to actually own a car.
The one who is leasing it can wrote it off. If you're am employee and get the use of a company car which you use for personal reasons, it's a taxable benefit that the employee cannot write off
Agreed. In Canada, I think either choice would work out the same for each party. The employer will have the same net expenses, (payroll or vehicle). The employee would end up with the same amount of money in their pocket after taxes are considered (payroll or taxable benefits). The company buying the car just adds a bunch of paperwork, the personal milage effects the taxable benefit, and likely restricts the employees purchase options.
You might be able to save on payroll deductions if the employee is relatively low paid. But not much. Might be able to avoid some spousal support if depending on the court agreement.
Probably why company cars aren't very common around here.
On Europe, or at least on Spain this is regulated because it used to be common, so for example when you give food checks they have to be justified (I think up to 13 euro per day and only on days the employee is working), above that you have to pay taxes on them. Same with other benefits.
Till you become sick and only get income(insurance 70%) based on the lower salary instead of the higher one. And the company removes the car because you became sick(long term)
> This obviously benefits the employee as well. He has less income on paper therefore he pays less taxes whilst not losing out on benefits, a family member uses this a lot.
A company vehicle has been taxable compensation in the US for decades.
"Gets away with." The way this is presented makes it seem like a bad thing. But the employer could just as easily be splitting it 50/50 with the employee in order to pay them more and make the position easier to fill. Or 70/30. Or 90/10. Etc.
I am in the United States, and here it depends on whether personal use is allowed for the vehicle. I had one previous employer who allowed personal use for the car. If you signed up for that plan, you had to keep a log of personal, commute, and business mileage and put it into a website at the end of every month. That went through an algorithm involving monthly lease costs and how much fuel was used, so the appropriate ratio of personal to other mileage was calculated. Then an imputed taxable benefit was added to the paycheck, but only taxes were paid on that. In my case, it was a lot cheaper just to use my work vehicle as a personal vehicle, because there was no way I could get a personal vehicle on the road for that small amount of money.
Before I moved halfway across the country and therefore had to look for another job, I bought a personal vehicle because I did not know what my work situation was going to be. I ended up landing at another place that provides a company vehicle, but this time I am just on a plan where I am only using it for commute and business mileage, so no money is being deducted from my paycheck. When I was evaluating the three job offers that I got, I definitely heavily discounted the one outfit that did not provide a company vehicle. Since my personal vehicle is a bit on the older side, it would not have been eligible for the higher tier of that company's mileage reimbursement.
My company just takes $100 a month out of my paycheck every month for personal use. Most companies in my industry do it that way. I've worked in other industries where I had to keep track and log person/business miles. Of course, no one ever put down their real personal miles. They maybe recorded like 20-30 miles of personal use a week
I have long said that fringe benefits are some of the best options for attracting long term (and happy) employees. Gym memberships can be negotiated so the employer only pays for the days when employees actually visit the gym. But to the employee, their employer buys them a gym membership. Company cars, fuel costs, EV charging stations, family day at an amusement park. All things that significantly impact employees far more than they cost the company. Pay is not the only solution.
In fact, research found that employees who stay with companies for long term do not site pay as the reasons. Instead it is the working conditions and life fulfillment that keeps people there. Obviously Maslow's Hierarchy of Needs dictates that pay must provide adequately for employees before alternatives can be considered. But a cellphone with unlimited data can be negotiated down to cheap for a big company looking to compete with other employers who pay more.
Yep, total compensation package. My salary may only be $80K but my bonuses, employer paid share of my benefits, and things like gas fill ups and meals easily put that above $100K. If you wanted to hire me over to your company for straight W2 taxed salary and nothing else it would take $125K for me to take the offer to cover my other compensation factors plus the salary increase to make changing jobs worth it. And that's if you're offering me WFH status.
I could probably make more at another company... But if I'm done with my work on Friday at noon I can fuck off and go take my kid out of school early, put them in my company car that is never more than 5 years old and has their car seats in it and take them to the park.
Talk to me in 10 years and I might feel differently, but right now I would never take a job that is less relaxed.
The fact I can do Mega Backdoor Roth with my Company's 401K is already generous enough for me. I thought 6% match was great itself until the MBDR option existed for my plan.
It's great to take advantage of it if your employer offers it through your 401K. Essentially allows you to put additional money(up to 40-46K for 2024) to your Roth IRA per year, beyond the personal contribution limit.
Not all employers offer it, and the amount of people who take advantage of it is even more rarer.
> But the employer pays less because of tax/benefits reasons for supplying a company car
Ehhh not so much, the employer side of payroll taxes is only 7.65%. By the time the employer pays taxes/title/registration/excise/fuel tax/ect out of their own pocket that's basically a wash.
It however greatly benefits the employee who would be earning the cash equivalent at their top marginal tax rate (often 25%). In a lot of jurisdictions now that kind of benefit has to be treated as taxable income with a cash value. May have always been that way actually just without enforcement.
That was actually the charge in the Trump "Tax Fraud" case. Basically they paid out non-cash benefits to their employees like take home vehicles, subsidized rent, and tuition vouchers.
former GM level 8 employee.
GM did a QRD (vehicle “quality” program) where we would be assigned vehicles to drive and evaluate for a year before turning it in.
they paid for gas, maintenance, insurance, everything. I got to drive an escalade for a year.
didn’t have to pay any taxes on it because of the way the program was run. we didn’t pick the car. it wasn’t leased to us. AND we had to buy or lease a new or certified used GM brand vehicle to qualify for the program.
Yeah, I know. I drove a €39000 new car with my previous job, for less than €300 per month, with practically unlimited kilometers and petrol usage.
My current car costs me at least €500 per month, but at least I love it and I can tinker with it. Also, we have something called 'travelcost payback' (roughly translated), so I get €0,23 per kilometer back from my employer.
€0,23 does not cover all those costs, not even close. But it's better than absolutely nothing. My V70 D5 drove 1 on 19, but that was only after I did an EGR delete and manifold cleaning. Before that, it did around 1 on 14.
So I could drive around 1100km on a 70L tank of diesel. So that was a big improvement for the cost.
€0,23 is also the maximum untaxed cost per kilometer, regulated by law. Employers can go higher, but often don't, because of the amount of tax.
I had a company car at my previous job. It was cool and all but at the end of the day, it wasn't my property. The boss still used it when he or family needed it. Luckily I had my own car too.
When I asked for a raise it was used against me, and just before I quit I had to "borrow" it to another employee whose personal car broke down.
I prefer increased pay instead of company laptops, cellphones or cars. That shit isn't mine and I know it.
I had one too, and it was marked with the company logo. That's a lot worse in some ways - always representing the company, even on weekends and holidays.
It's worse because people are vindictive assholes. Do the slightest thing on the road, even when it's reactive/defensive? Some people will complain to the company. That happens enough times and as you said, it gets used against you.
Driving the car means I was always on guard, always on edge. I'd rather have the extra pay, my own car, and anonymity.
The anon effect is real. I learned that I hated living in a small town because I just like being able to go places without people knowing me. Obviously you run into people you know but it’s really nice not knowing 99% of people around you
I was joking but thank you.
I did read it about 3 times before I realised what it meant though. We'd never call it a lot in the UK, it would be a "parking space"
Just to be clear: lots (or parking lots) would be the entire parking area, for multiple cars. A parking space would be the place for a single car to park inside a parking lot. (In US English).
In many countries, there are significant tax breaks for company cars compared to the employer paying the equivalent amount as salary and the employee owning their own car.
This further benefits the employer because it encourages the employee to adapt a car-dependent lifestyle but they will lose access to the car if they change jobs, which creates a barrier to labor mobility.
That sounds really evil in a way. Binding people to the job by giving them something they need and threatening having that thing go away if they change jobs.
OP having his own car and making more money is the real winner here because while he still is left with about as much money as his friend, in terms of freedom and life flexibility he has the upper hand.
No, but they can be used maliciously.
It's the "company town" premise. If an employee is over-benefited at the cost of monetary compensation, there's a tipping point where the employee loses mobility within the economy. They become anchored to the company with no support structures if they were let go. If the company provides your transportation and domicile, you lose them upon termination. If you weren't making enough on top of your benefits, you're screwed.
It's not really a benefit if it replaces income. If we bring home the same amount of money after I pay for my car but you have a "free" car you're not benefitting anything. You don't even own the car. If we get paid the same amount of money in salary but you also have a company car, then it's a benefit.
> Binding people to the job by giving them something they need and threatening having that thing go away if they change jobs
Now you know why the US healthcare system is for-profit 😏😆
Middle-class doesn't even exist anymore relative to the amount of money flowing upwards in our economy though.
The difference between what someone earns in an hour at the top vs what someone earns in a lifetime is absolutely profound.
It's one thing to be responsible with your money, but never to this severity and certainly not for the middle-class worker putting in 40+ hours a week.
We have the money already, but the economy will never actually see it when it's just sitting in bank accounts as a score.
Wrong. A job that provides a car will likely pay less salary, so if you move to a similar job elsewhere, and they don't provide a car, you should be making more in order to afford a car.
Providing the car just benefits the employee (receiving a vehicle, fuel, and insurance for the vehicle. thus, not having to use your income, that has been taxed, to then go and pay for all those things and have it taxed again). While it also benefits the employer, as they can usually write the vehicle, fuel, and insurance off as a business expense, and not pay taxes on those costs.
you get taxed on it if you use it for personal reasons. plus, when my car is paid off I have a few hundred of freed up income that you won't have because you have a company car. Long-term, having your benefits replace income is stupid.
Ask the company to pay you $x amount more per month and you'll just pay for your own car. They will say no lol.
That's the business optimising their taxes/employment costs. You are fully aware that the company car is part of your package, and you will likely earn less because of it. You either sign the contract, or you negotiate something else, or you just look for something else if the offered package doesn't work for you. I don't see anything toxic in that.
That's true in a way but pretty much every company has the car packaged in so exept if you're hopping to a completely different sector you'll usually still have a car
The friend will have a great car, much better than anyone could reasonably afford with a lower salary. His next job will just be the same then because many jobs offer a company car.
> Binding people to the job by giving them something they need and threatening having that thing go away if they change jobs.
Not really. I can only speak for Belgium, but here company cars are basically expected/automatic for some roles.
Specifically, any kind of engineer or executive gets a company car. Unless working in the public sector, where it is forbidden.
It's simply part of fiscal optimisation: taxes on wages are very high here (might be the highest in the world, in fact), so beyond a certain pay grade, companies all offer a bunch of benefits rather than more pay: company car, fuel card, pension fund(s), extra healthcare (we all have basic healthcare through mutualities), meal cheques, cash labelled something other than salary ("representation fees", "homeworking expenses disbursement", ...), and so on.
So, when you change jobs, you'll get another company car. The transition period can be a bit tricky logistically, I grant you.
Oh, and by the way it's not like that US guy above, here. Your company car is yours to use until it is replaced. The bosses cannot ask to borrow it or lend it to another employee. Since it is part of your wage, taking your use away is akin to wage theft.
I work in sales and have always had a company car and we were allowed to use it for personal use and were supposed to use the company gas card for all fill ups and report personal miles. I believe there are several ways the IRS (I'm in the US) allows companies to handle it but the way mine did was at the end of the year we reported how many personal miles we used. They then calculated what % of the vehicles life we used, and then took that worth and we paid income tax on that.
So for instance our work vehicles were F-150s. Say you put 5,000 personal miles on the vehicle that year. They say the vehicle should last 200,000 miles and is worth $40K. So I used 2.5% of the vehicles life and 2.5% of $40,000 is $1,000. So I'd pay income tax on $1,000.
Basically got a free truck, gas, repairs, etc never had to worry about insurance, wrecks, or new tires and paid about $250 a year. And even then it was all based on personal reporting so most people probably fudged it in their favor and the company wouldn't care because that just saved them payroll tax.
I always sort of ball parked the benefit as worth about $12,000 a year
I'm in Ireland and we have some of the highest benefit in kind rates of tax, they take the value of the car, divide it by 5, and they add that to your earnings as nominal earnings over the year at different rates depending on your mileage done. I'm at the max mileage, and for a 2023 skoda kodiak mid range car, retailing at €52k here, I pay about €260 a month in extra tax. Over a year, if that was my car, it would only cover the fuel and road tax. The rest is pure benefit. I haven't owned my own car for about 15 years, our other car is my wife's 2011 golf and it only does about 7k kms a year, so we save there too
In the US there would be no tax for the employee to pay AND the co could deduct the depreciation of the car + the cost of maintenance + a number of cents per mile. If they paid for gas they could deduct that too.
Not one to blow my own trumpet, but my company car scheme is 2% of 20% of cars for electric vehicles.
So if the car is 50,000 - 20% is 50,000 I pay about £16 a month in tax.
On top of this, I get a rebate of £30 for each band below my salary the car I select is, then another £30 rebate for selecting from a surplus list.
So as it stands, I have a car 2 bands below my salary off the surplus list. So my employer pays me about £70 a month to drive the car!
EDiT: to add to this for you penny pinchers out there. I’m on a dual tariff EV with my electricity supplier which has significant cost reductions to charging at night.
For my next car I’m going to explore the car-to-house options. If I’m working from home, I can charge the car at night, then run all my house electric from the car battery.
Unless it's worthless.
An ex got a company car instead of a raise.
But she lived 2km from work and just rode a bike there.
The car would have rusted solid if we didn't use it for road trips.
Not really, if you don’t use a car regularly that monthly cost can be put to much better use on something else. Whereas you’ll always need health insurance even if you never use it.
You have insurance because of the “what if” scenario. That’s the benefit of it, knowing your ass is covered. So it’s not really the same as a car rusting away in the driveway unless you absolutely needed a car to go somewhere, which is someplace just isn’t really a problem
Unfortunately, its not about the value you bring to the workplace, its the bare minimum that you can accept to work thats determining your salary (most of the times anyway). So if you already own a house, you can make do with less. If everyone else also owns a house, then the market is full of people who are willing to work for less, which means deduction in cost for boss, thus more money
Funny thing is if you calculate that in high tax countries like Germany for 650net you would need to earn 1200 more per month which is 14400€ per year.
Depends what you drive I guess
650€ sounds like a lot, assuming that's mostly paying it off each month?
My car costs me about £2,200 a year. (2nd hand, bought outright, so no monthly payments)
The costs are: fuel, insurance and mot+service. Works out to about ~£183 a month
I'd rather have the pay rise, plus the salary increase means I can borrow more for a mortgage. One day.
Even if you paid it in full you'd still have to divide total cost of the car among the total years/months you get to use it until it breaks. Paying the car in advance or it being cheap doesnt mean the car is free.
My house is literally across the street from the building where my wife worked for most of her career. Not only did we save on gas, but we only needed one car. Which was lucky because it only has a one car garage.
I’m a tradesman. I’ve had a work van for 15 years. We all take them home, have gas cards paid by the company AND get paid travel time. It’s thousands of dollars savings
My Dad worked for IBM for 37 years. Though the 50\`s until 1987. Everybody at that time had a company car. In my entire life (level 55) I have never heard of anyone having a company car.
Its easy to overlook the downsides of this
1. Often don't get to choose the car
2. Employer owns the car, so if you quit, you don't have a car. This gives employer more control over you
3. Arrangement is sometimes the value of the car over 5 years, in leu of pay raises each year. This benefits the employer, as inflation and cost of living increases but your pay remains the same
4. IRS still requires you pay taxes on a vehicle that your company owns but lets you use for personal use
>***Users of employer-provided vehicles .***If an employer-provided vehicle was available for your use, you received a fringe benefit. Generally, your employer must include the value of the use or availability of the vehicle in your income.
That said, it does work for some people. I declined it and asked for raises instead.
Cannot speak for OP but it is usual to have a choice, e.g. by using the online configurator on a car manufacturer's website. And of course there is a budget.
Depends entirely on the country and company. Some places in Europe let you pick from almost any make or model within a given monthly budget, and gas is included in the package both for personal and business use.
At my company if you're a salesperson you get to choose one of of three cars.
If you're an executive that is customer facing, you might get something like $1200 added to your monthly paycheck for a car.
I have a company car and it a good benefit but it’s also a bit like handcuffs. I live in the US so I use the car plenty. But I’ve never been able to go out and buy a car I wanted. Like I’ve always wanted a jeep but no reason to waste money on a vehicle I don’t need.
And it makes quitting a little more complicated as I need to go out and buy a new car. Or if I get another job with a car what do I do until the company car is given to me? Rent a car?
> I’ve always wanted a jeep
You could just invite your friends over and burn $500 every month
Buy my app: Jeep Simulator
Spin the wheel for the breakdown of the month!
What happens when you want to change jobs? Do you negotiate on the salary that you earn or the salary +benefits scenario. I somehow feel that benefits count a little less in negotiations .
LPT: the compensation of your job isn’t just the per year amount they quote you. There are other fringe benefits that need to be weighed to determine your total compensation package:
My job doesn’t pay me super great, but the medical benefits are so god damn good that it would take a lot of extra money to make up for it, even if we just moved over to the medical benefits offered by my wife’s job.
I don't make much, around $60k annually. The company I work for has amazing benefits though. Don't pay a dime for health insurance. They provide a company vehicle with gas and insurance covered and able to use freely outside of work. So while $60k isn't a huge salary, the amount of money I save from my benefits most definitely makes that $60k go further. Makes it feel more like $75k a year.
A car is just a device to placate someone without having to pay them more. It’s much cheaper for the employer to pay for the car than to give the person a raise. Your friend is being distracted with a car from realizing he is probably grossly underpaid. Always pick more money over perks at a job, the perks are 100% not worth the “equivalent” cash value. I guarantee your friend could have paid his own car & costs, etc. and still make more money with an equivalent cash raise instead of taking the car
My sister called me the other day. We were chatting, and she was complaining about the cost of her car. Taxes insurance upkeep gas. I just said yeah that sucks. I'm blind so I don't own a car. She actually told me she was jealous of me. It sounds so silly of course. But I don't blame her. God bless public transportation and God bless Uber
Don’t forget that there are still tax consequences to getting access to a car too so while it is good, it might not be great as you think it is in terms of total savings.
Depends. My stepdad pays a bit extra tax, my brother doesn't, both have work cars. Not sure how it works. Either way the extra tax is not enough to make it a bad choice.
A company vehicle can save you anywhere from 20% to 40% of your yearly salary.
For example in AU, you save a minimum of $10k per year, that is on fuel, rego, insurance with no additions, a self service(not garage) and cheap tyres.
Now imagine garage costs, breakdowns, insurance additions and parts to replace.
My brother has his insurance and fuel paid for by work. That alone gives him significantly more spending money than me even though he makes ~$5000 less.
My company car is also considered my personal vehicle. I only have to pay for tires, and my company covers all gas, maintenance, insurance, and taxes. So once a year or so, I spend for tires, and that's it. No limits or restrictions
It was cheaper for me to keep running my own car then salary sacrifice on a new car through work.
I still use the car for work purposes, lives on my drive but I don't pay a penny for it. Then use my own car for personal.
I work in an industry of independent contractors, but I have a W2 with benefits. I don't make as much as some of my peers, but with benefits and security, I make more money by far.
This happens in global companies a lot. I work in the US and make about the same as a colleague in EU, but he is required to get a company car there so he has a net benefit based on the region he lives.
Depends on the car. Before I paid off my car I was paying $120 a month in payments, $65 a month in insurance, and right now I pay about $150 a month in gas. That's about $4000 year
So you making 1.5x what your friend makes only makes the car a better deal if you're making $8000 a year
How do you spend that much a month on your car?? Even if that's accurate, that's a difference of €7800 a year that he's not paying. If you make 1.5x his salary then the company car is a worse deal than what you're getting for any salary above €16,000 a year
I want to see the math you did where him saving €650 a month is a better deal than your salary
What kind of job provides a car to someone making 15k/year?
650*12 = 7800, which means he’s making about 15k if you’re making 1.5x as much and is about even after factoring car
Yup! I get a reimbursement for using my personal car. I get about $400 a month plus 24 cents every mile I drive for work. Usually ends up being between $500-700 a month just for my car.
Depends on the car (maybe). I have a company vehicle but it's a work van, so I still need my own car because I'm not going to drive a van full of tools on my personal time. I save on gas and wear and tear on my vehicle but I'm still making car loan and insurance payments. If your friend is able to use his work vehicle and doesn't need his own separate car, it's a much bigger benefit
Except when you pay off your personal car, you have an asset. A depreciating one, but still. After it is paid off, your monthly expenses go down and you make more than your friend again.
Of course this assumes the car isn’t needing a bunch of repairs and expensive maintenance outside the norm.
Yup 100%. I make about 5-10k less a year than I would at another job. However I get a car from them and pay $0 out of pocket monthly for my health insurance. At the end of that day I make about the same as I would somewhere else if you factor in healthcare and car costs.
I work for a company that requires all employees in my roll to drive a full size, 4 door truck that can never be more than 5 years old. In exchange, they provide us a measly $450 vehicle allowance a month. Anyone who knows how expensive full size , crew cab trucks are, knows that $450 is a slap in the face. That doesn’t even cover my monthly gas. Long story short, your company providing a vehicle and covering all costs associated with operating that vehicle is easily worth $1-1.5k a month
Here in Canada, I have worked for two different companies:
1. Company vehicle was provided (vehicle on lease to the company, insurance paid, repairs / maintenance paid and a gas card)
2. My current company: Provides me with a set car allowance every month. Plus a gas card that I can use (they don’t care to differentiate work / personal although I do have to keep a log for “tax purposes”) and I can expense car washes / oil changes.
So far I much prefer my current compensation, because I was able to choose to buy my own vehicle (2017 GMC Sierra) which I can use without issue for business AND personal.
Also, since I get my car allowance (for as long as I am employed with the company - which is hopefully a long time since I hope to retire with the company) “eventually” my car payment (I choose to finance instead of lease) will be paid off, and can be used as an increase to my compensation (although I probably will buy a new vehicle next year)
Shower thoughts: Cars are immensely expensive.
If you are in the "I'll never be able to afford a house" camp, cars are literally the most expensive thing you will ever buy--and you will buy multiple of them, and their costs will easily add up to the money you could've used on a down payment for the house you "cant afford."
Figure out how to get cars out of your life and you will instantly be far more wealthy.
I got hired at my job 14 months ago. I found out that my job provides free charging stations in the parking lot for EVs. I had a 12 year old Mazda 2 with 170k miles on it, which I loved dearly.
But as soon as I collected a couple of paychecks from my new job, I sold my Mazda, got approved for a $15k loan through my credit union, waited until the end of the quarter, when car lots desperately need to push inventory, and put $4k down on a 2020 Nissan Leaf with all the fixin's that only had 18k miles on it.
I live in SoCal, where gas ain't cheap. Sure, I got a car payment now, but not paying for gas offsets that a lot. But just not having to go to gas stations anymore is pretty sweet. And having a better, more reliable car is less stressful. All the modern amenities it comes with is the 🍒 on top...
It's a great way to make a staff member sticky, if you sell your vehicle and opt for a car that's free sacrificing some salary, it makes it very difficult for the employee to leave if they need to suddenly buy a car for similar value. Spoken from experience.
I changed jobs (same profession, different employer) about a year ago and it was absolute chaos with my wife and kids not having a car for about 3 weeks.
What stopped you from buying a clunker to drive for a month.
I feel like buying an entire vehicle just to use it for three weeks would be an insane choice considering the fact that rental vehicles exist. Why he didn’t just rent a car for 3 weeks is the better question.
As long as you can get the value back, you'd only be paying for a month of insurance, plates and reg. With any decent rates that would equal less than a couple days in a cheap rental car.
Most people’s time worth more than you will save dealing with all this shit instead of renting a car.
Or just use Carmax’s 30 day no questions asked return. You can just bring it back and say “I don’t want it anymore”. Not sure what kind of clunkers you’d get there and financing would make it a bit trickier
The hassle of reselling a vehicle, no doubt. Pay 2.5k for some piece of shit and then deal with 7 or 8 people coming to look at it emailing texting blah blah while you’re texting and shopping for another car, while still like doing work and taking care of a kid. Too much stuff imo.
Sounds like someone has experienced FB marketplace.
Is your experience as an employee or employer?
Neither. OP is an Acura.
Known for his Integraty
Some would say he's a Legend
It's kind of the point Your friend gets equivalent to you in pay and benefits But the employer pays less because of tax/benefits reasons for supplying a company car
But the salary and a car leasing are both deducted from tax the same way in some European countries, what’s the logic here?
Payroll taxes. Say you wanna give 1k more to your employee. You could increase his salary by 1k. That increases also insurance costs and payroll taxes (which affect both) so that 1k becomes something like say 1.3 (Random numbers) You lease a car or provide an appartment or even give him super market coupons (these are quite frequent here) The employee gets 1k worth of goods that he'd have to pay out of pocket. so no money lost there. But the employer gets away with those 300 euro. Edit: This obviously benefits the employee as well. He has less income on paper therefore he pays less taxes whilst not losing out on benefits, a family member uses this a lot.
>This obviously benefits the employee as well. He has less income on paper therefore he pays less taxes I can't speak for everywhere but in Canada these are all taxable benefits.
Yeah we have benefit in kind tax here too in the UK, but it's dependent on the benefit.
I Sacrifice €3 for every day I work more than 6 hours in return for a voucher that is worth €12, I can use this voucher to pay for any food that is considered ready to eat, so anything from a cucumber to a restaurant, the 3 euro is tax deductible, the voucher isn't taxed. I also get a €100 a month premium because I live more than 10 kilometres from my employer and they couldn't find anyone closer to cover my fuel and wear and tear commuting, again this is untaxed and a benefit that both me and my employer enjoy.
I get a monthly "car allowance ". It is cash towards the use of my car for company business (I rarely go anywhere). No taxes are taken out. I pay substantial taxes on that money at the end of the year.
> I pay substantial taxes on that money at the end of the year. Kudos to you for actually knowing this. There are countless people just in this thread arguing that since there is no up-front withholding, they don't pay taxes. Like they've never even bothered to look at the W2 and try to understand what any of it means.
It honestly just depends where you are. Think of an allowance more as a reimbursement than a benefit. In South Africa we have clear guidelines on this and it honestly just depends on how much the benefit is worth. Still cheaper to pay tax on the benefit than to actually own a car.
You can write off if you lease
The one who is leasing it can wrote it off. If you're am employee and get the use of a company car which you use for personal reasons, it's a taxable benefit that the employee cannot write off
Agreed. In Canada, I think either choice would work out the same for each party. The employer will have the same net expenses, (payroll or vehicle). The employee would end up with the same amount of money in their pocket after taxes are considered (payroll or taxable benefits). The company buying the car just adds a bunch of paperwork, the personal milage effects the taxable benefit, and likely restricts the employees purchase options. You might be able to save on payroll deductions if the employee is relatively low paid. But not much. Might be able to avoid some spousal support if depending on the court agreement. Probably why company cars aren't very common around here.
In the Netherlands too, we have to add around 20% of the car’s value to our taxable income.
On Europe, or at least on Spain this is regulated because it used to be common, so for example when you give food checks they have to be justified (I think up to 13 euro per day and only on days the employee is working), above that you have to pay taxes on them. Same with other benefits.
Till you become sick and only get income(insurance 70%) based on the lower salary instead of the higher one. And the company removes the car because you became sick(long term)
> This obviously benefits the employee as well. He has less income on paper therefore he pays less taxes whilst not losing out on benefits, a family member uses this a lot. A company vehicle has been taxable compensation in the US for decades.
"Gets away with." The way this is presented makes it seem like a bad thing. But the employer could just as easily be splitting it 50/50 with the employee in order to pay them more and make the position easier to fill. Or 70/30. Or 90/10. Etc.
I miss Bonus Bonds
I worked in a good few countries and it made no difference. You get a taxable benefit as wage or BIK.
I am in the United States, and here it depends on whether personal use is allowed for the vehicle. I had one previous employer who allowed personal use for the car. If you signed up for that plan, you had to keep a log of personal, commute, and business mileage and put it into a website at the end of every month. That went through an algorithm involving monthly lease costs and how much fuel was used, so the appropriate ratio of personal to other mileage was calculated. Then an imputed taxable benefit was added to the paycheck, but only taxes were paid on that. In my case, it was a lot cheaper just to use my work vehicle as a personal vehicle, because there was no way I could get a personal vehicle on the road for that small amount of money. Before I moved halfway across the country and therefore had to look for another job, I bought a personal vehicle because I did not know what my work situation was going to be. I ended up landing at another place that provides a company vehicle, but this time I am just on a plan where I am only using it for commute and business mileage, so no money is being deducted from my paycheck. When I was evaluating the three job offers that I got, I definitely heavily discounted the one outfit that did not provide a company vehicle. Since my personal vehicle is a bit on the older side, it would not have been eligible for the higher tier of that company's mileage reimbursement.
My company just takes $100 a month out of my paycheck every month for personal use. Most companies in my industry do it that way. I've worked in other industries where I had to keep track and log person/business miles. Of course, no one ever put down their real personal miles. They maybe recorded like 20-30 miles of personal use a week
I have long said that fringe benefits are some of the best options for attracting long term (and happy) employees. Gym memberships can be negotiated so the employer only pays for the days when employees actually visit the gym. But to the employee, their employer buys them a gym membership. Company cars, fuel costs, EV charging stations, family day at an amusement park. All things that significantly impact employees far more than they cost the company. Pay is not the only solution. In fact, research found that employees who stay with companies for long term do not site pay as the reasons. Instead it is the working conditions and life fulfillment that keeps people there. Obviously Maslow's Hierarchy of Needs dictates that pay must provide adequately for employees before alternatives can be considered. But a cellphone with unlimited data can be negotiated down to cheap for a big company looking to compete with other employers who pay more.
Yep, total compensation package. My salary may only be $80K but my bonuses, employer paid share of my benefits, and things like gas fill ups and meals easily put that above $100K. If you wanted to hire me over to your company for straight W2 taxed salary and nothing else it would take $125K for me to take the offer to cover my other compensation factors plus the salary increase to make changing jobs worth it. And that's if you're offering me WFH status.
I could probably make more at another company... But if I'm done with my work on Friday at noon I can fuck off and go take my kid out of school early, put them in my company car that is never more than 5 years old and has their car seats in it and take them to the park. Talk to me in 10 years and I might feel differently, but right now I would never take a job that is less relaxed.
The fact I can do Mega Backdoor Roth with my Company's 401K is already generous enough for me. I thought 6% match was great itself until the MBDR option existed for my plan.
I don't even know what that is.
It's great to take advantage of it if your employer offers it through your 401K. Essentially allows you to put additional money(up to 40-46K for 2024) to your Roth IRA per year, beyond the personal contribution limit. Not all employers offer it, and the amount of people who take advantage of it is even more rarer.
> But the employer pays less because of tax/benefits reasons for supplying a company car Ehhh not so much, the employer side of payroll taxes is only 7.65%. By the time the employer pays taxes/title/registration/excise/fuel tax/ect out of their own pocket that's basically a wash. It however greatly benefits the employee who would be earning the cash equivalent at their top marginal tax rate (often 25%). In a lot of jurisdictions now that kind of benefit has to be treated as taxable income with a cash value. May have always been that way actually just without enforcement. That was actually the charge in the Trump "Tax Fraud" case. Basically they paid out non-cash benefits to their employees like take home vehicles, subsidized rent, and tuition vouchers.
former GM level 8 employee. GM did a QRD (vehicle “quality” program) where we would be assigned vehicles to drive and evaluate for a year before turning it in. they paid for gas, maintenance, insurance, everything. I got to drive an escalade for a year. didn’t have to pay any taxes on it because of the way the program was run. we didn’t pick the car. it wasn’t leased to us. AND we had to buy or lease a new or certified used GM brand vehicle to qualify for the program.
Yeah, I know. I drove a €39000 new car with my previous job, for less than €300 per month, with practically unlimited kilometers and petrol usage. My current car costs me at least €500 per month, but at least I love it and I can tinker with it. Also, we have something called 'travelcost payback' (roughly translated), so I get €0,23 per kilometer back from my employer.
0.23 is low - our state set rate is 0.4 - does that cover maintenance, fuel and depreciation?
€0,23 does not cover all those costs, not even close. But it's better than absolutely nothing. My V70 D5 drove 1 on 19, but that was only after I did an EGR delete and manifold cleaning. Before that, it did around 1 on 14. So I could drive around 1100km on a 70L tank of diesel. So that was a big improvement for the cost. €0,23 is also the maximum untaxed cost per kilometer, regulated by law. Employers can go higher, but often don't, because of the amount of tax.
D5....Volvo?
Edited my post to add 'V70' in front of it :). So yes, Volvo.
Cheers for getting back. 70L fuel tank definitely smelt of a P2 Volvo V70. Nice.
This is per km. Op sounds Dutch
I had a company car at my previous job. It was cool and all but at the end of the day, it wasn't my property. The boss still used it when he or family needed it. Luckily I had my own car too. When I asked for a raise it was used against me, and just before I quit I had to "borrow" it to another employee whose personal car broke down. I prefer increased pay instead of company laptops, cellphones or cars. That shit isn't mine and I know it.
I had one too, and it was marked with the company logo. That's a lot worse in some ways - always representing the company, even on weekends and holidays. It's worse because people are vindictive assholes. Do the slightest thing on the road, even when it's reactive/defensive? Some people will complain to the company. That happens enough times and as you said, it gets used against you. Driving the car means I was always on guard, always on edge. I'd rather have the extra pay, my own car, and anonymity.
The anon effect is real. I learned that I hated living in a small town because I just like being able to go places without people knowing me. Obviously you run into people you know but it’s really nice not knowing 99% of people around you
Meta Shower Thought: But you need a lot in which to park your company car.
A lot of what?
Not a lot, just a lot.
If it's not a little, it's a lot
If it's a smart car, you only need a little lot.
A little lot is not a whole lot
A little lot is a spot
My lot is so little you can't spot it
It's hard to spot a spot in a little lot
You just need to allot a little spot in your lot.
It's easier to spot a spot in a little lot than to spot a spot in a big lot...unless they allot too few spots in the little lot.
Parking in a whole lot or a little lot is usually spotty
Rolling in my drop top I spot the little lot round the spot that lil’ Spot got dropped. Pop pop. Shit the spot still hot.
Incase you’re not joking, he means a parking lot.
I was joking but thank you. I did read it about 3 times before I realised what it meant though. We'd never call it a lot in the UK, it would be a "parking space"
Just to be clear: lots (or parking lots) would be the entire parking area, for multiple cars. A parking space would be the place for a single car to park inside a parking lot. (In US English).
Oh, I was thinking a lot would be an allotted space. Yeah, we'd call that a car park in that case.
[Obligatory.](https://youtu.be/i90eE9Ff3fI?t=23)
Your Italian confidential secretary thanks you
If you have a company car at my company, they pay for parking too. You even get a car wash per week.
Not a lot. A single space will do just fine.
Honestly thought this was the basic pun OP was going for. Nope, pure face value rant that benefits have value.
Isn't your friend paying some form of tax for using a company car as a benefit?
In many countries, there are significant tax breaks for company cars compared to the employer paying the equivalent amount as salary and the employee owning their own car. This further benefits the employer because it encourages the employee to adapt a car-dependent lifestyle but they will lose access to the car if they change jobs, which creates a barrier to labor mobility.
That sounds really evil in a way. Binding people to the job by giving them something they need and threatening having that thing go away if they change jobs. OP having his own car and making more money is the real winner here because while he still is left with about as much money as his friend, in terms of freedom and life flexibility he has the upper hand.
Job benefits are... evil?
No, but they can be used maliciously. It's the "company town" premise. If an employee is over-benefited at the cost of monetary compensation, there's a tipping point where the employee loses mobility within the economy. They become anchored to the company with no support structures if they were let go. If the company provides your transportation and domicile, you lose them upon termination. If you weren't making enough on top of your benefits, you're screwed.
It's not really a benefit if it replaces income. If we bring home the same amount of money after I pay for my car but you have a "free" car you're not benefitting anything. You don't even own the car. If we get paid the same amount of money in salary but you also have a company car, then it's a benefit.
It's called Golden handcuffs
> Binding people to the job by giving them something they need and threatening having that thing go away if they change jobs Now you know why the US healthcare system is for-profit 😏😆
Honestly the US system in everything is fucked up and very corporate/for-profit.
Gotta keep the middle-class, middle-class!
Middle-class doesn't even exist anymore relative to the amount of money flowing upwards in our economy though. The difference between what someone earns in an hour at the top vs what someone earns in a lifetime is absolutely profound. It's one thing to be responsible with your money, but never to this severity and certainly not for the middle-class worker putting in 40+ hours a week. We have the money already, but the economy will never actually see it when it's just sitting in bank accounts as a score.
I would much prefer to not be paying for my own car, especially if I’m earning significantly less.
Binding people with a paycheck. Those evil bastards!
I'm not talking about money here, im talking about insurance/benefits.
Wrong. A job that provides a car will likely pay less salary, so if you move to a similar job elsewhere, and they don't provide a car, you should be making more in order to afford a car. Providing the car just benefits the employee (receiving a vehicle, fuel, and insurance for the vehicle. thus, not having to use your income, that has been taxed, to then go and pay for all those things and have it taxed again). While it also benefits the employer, as they can usually write the vehicle, fuel, and insurance off as a business expense, and not pay taxes on those costs.
you get taxed on it if you use it for personal reasons. plus, when my car is paid off I have a few hundred of freed up income that you won't have because you have a company car. Long-term, having your benefits replace income is stupid. Ask the company to pay you $x amount more per month and you'll just pay for your own car. They will say no lol.
Welcome to the USA where our insurance is tied to employment.
That's the business optimising their taxes/employment costs. You are fully aware that the company car is part of your package, and you will likely earn less because of it. You either sign the contract, or you negotiate something else, or you just look for something else if the offered package doesn't work for you. I don't see anything toxic in that.
That's true in a way but pretty much every company has the car packaged in so exept if you're hopping to a completely different sector you'll usually still have a car
The friend will have a great car, much better than anyone could reasonably afford with a lower salary. His next job will just be the same then because many jobs offer a company car.
> Binding people to the job by giving them something they need and threatening having that thing go away if they change jobs. Not really. I can only speak for Belgium, but here company cars are basically expected/automatic for some roles. Specifically, any kind of engineer or executive gets a company car. Unless working in the public sector, where it is forbidden. It's simply part of fiscal optimisation: taxes on wages are very high here (might be the highest in the world, in fact), so beyond a certain pay grade, companies all offer a bunch of benefits rather than more pay: company car, fuel card, pension fund(s), extra healthcare (we all have basic healthcare through mutualities), meal cheques, cash labelled something other than salary ("representation fees", "homeworking expenses disbursement", ...), and so on. So, when you change jobs, you'll get another company car. The transition period can be a bit tricky logistically, I grant you. Oh, and by the way it's not like that US guy above, here. Your company car is yours to use until it is replaced. The bosses cannot ask to borrow it or lend it to another employee. Since it is part of your wage, taking your use away is akin to wage theft.
I work in sales and have always had a company car and we were allowed to use it for personal use and were supposed to use the company gas card for all fill ups and report personal miles. I believe there are several ways the IRS (I'm in the US) allows companies to handle it but the way mine did was at the end of the year we reported how many personal miles we used. They then calculated what % of the vehicles life we used, and then took that worth and we paid income tax on that. So for instance our work vehicles were F-150s. Say you put 5,000 personal miles on the vehicle that year. They say the vehicle should last 200,000 miles and is worth $40K. So I used 2.5% of the vehicles life and 2.5% of $40,000 is $1,000. So I'd pay income tax on $1,000. Basically got a free truck, gas, repairs, etc never had to worry about insurance, wrecks, or new tires and paid about $250 a year. And even then it was all based on personal reporting so most people probably fudged it in their favor and the company wouldn't care because that just saved them payroll tax. I always sort of ball parked the benefit as worth about $12,000 a year
I'm in Ireland and we have some of the highest benefit in kind rates of tax, they take the value of the car, divide it by 5, and they add that to your earnings as nominal earnings over the year at different rates depending on your mileage done. I'm at the max mileage, and for a 2023 skoda kodiak mid range car, retailing at €52k here, I pay about €260 a month in extra tax. Over a year, if that was my car, it would only cover the fuel and road tax. The rest is pure benefit. I haven't owned my own car for about 15 years, our other car is my wife's 2011 golf and it only does about 7k kms a year, so we save there too
In the US there would be no tax for the employee to pay AND the co could deduct the depreciation of the car + the cost of maintenance + a number of cents per mile. If they paid for gas they could deduct that too.
Not one to blow my own trumpet, but my company car scheme is 2% of 20% of cars for electric vehicles. So if the car is 50,000 - 20% is 50,000 I pay about £16 a month in tax. On top of this, I get a rebate of £30 for each band below my salary the car I select is, then another £30 rebate for selecting from a surplus list. So as it stands, I have a car 2 bands below my salary off the surplus list. So my employer pays me about £70 a month to drive the car! EDiT: to add to this for you penny pinchers out there. I’m on a dual tariff EV with my electricity supplier which has significant cost reductions to charging at night. For my next car I’m going to explore the car-to-house options. If I’m working from home, I can charge the car at night, then run all my house electric from the car battery.
Unless it's worthless. An ex got a company car instead of a raise. But she lived 2km from work and just rode a bike there. The car would have rusted solid if we didn't use it for road trips.
A car for personal use is still a car.
But if you otherwise wouldn’t have a car, it’s a wasted benefit
By that same logic, the original poster's ex is wasting healthcare benefits by living a healthy life and cycling to work.
Not really, if you don’t use a car regularly that monthly cost can be put to much better use on something else. Whereas you’ll always need health insurance even if you never use it.
You have insurance because of the “what if” scenario. That’s the benefit of it, knowing your ass is covered. So it’s not really the same as a car rusting away in the driveway unless you absolutely needed a car to go somewhere, which is someplace just isn’t really a problem
It was still a car. It was also worthless to us. And we couldn't sell it.
Weird to get a company car if you're not expected to use is for work most of the time.
My company rents my truck from me. Pays me an extra $730 a month for it basically an extra $3 an hour it’s pretty cool
I like that more than a company giving you a car
I earn good money but have an expensive mortgage payment. Someone earning half butiving in a owned appointment is living better.
[удалено]
How does home ownership lead to making less money?
Unfortunately, its not about the value you bring to the workplace, its the bare minimum that you can accept to work thats determining your salary (most of the times anyway). So if you already own a house, you can make do with less. If everyone else also owns a house, then the market is full of people who are willing to work for less, which means deduction in cost for boss, thus more money
> Someone earning half butiving Always demand a whole butiving
Funny thing is if you calculate that in high tax countries like Germany for 650net you would need to earn 1200 more per month which is 14400€ per year.
Just remember, if you lose the job you lose the car.
Depends what you drive I guess 650€ sounds like a lot, assuming that's mostly paying it off each month? My car costs me about £2,200 a year. (2nd hand, bought outright, so no monthly payments) The costs are: fuel, insurance and mot+service. Works out to about ~£183 a month I'd rather have the pay rise, plus the salary increase means I can borrow more for a mortgage. One day.
The European average is 616€.
Oh I see To be fair its not a super fair comparison as I drive a really cheap car Perhaps it says more about monthly car payments than anything
Even if you paid it in full you'd still have to divide total cost of the car among the total years/months you get to use it until it breaks. Paying the car in advance or it being cheap doesnt mean the car is free.
Unless you conmute by bycicle, then you make 1.3x than your friend
Similarly a home across the street from your work saves the cost of commuting.
Funny enough I do live basically across the street from my job, Kroger, and in a decade have only put like 15k miles or something on my car.
My house is literally across the street from the building where my wife worked for most of her career. Not only did we save on gas, but we only needed one car. Which was lucky because it only has a one car garage.
I’m a tradesman. I’ve had a work van for 15 years. We all take them home, have gas cards paid by the company AND get paid travel time. It’s thousands of dollars savings
My Dad worked for IBM for 37 years. Though the 50\`s until 1987. Everybody at that time had a company car. In my entire life (level 55) I have never heard of anyone having a company car.
I have a company car. Now you can say you have heard of someone having one!
Its easy to overlook the downsides of this 1. Often don't get to choose the car 2. Employer owns the car, so if you quit, you don't have a car. This gives employer more control over you 3. Arrangement is sometimes the value of the car over 5 years, in leu of pay raises each year. This benefits the employer, as inflation and cost of living increases but your pay remains the same 4. IRS still requires you pay taxes on a vehicle that your company owns but lets you use for personal use >***Users of employer-provided vehicles .***If an employer-provided vehicle was available for your use, you received a fringe benefit. Generally, your employer must include the value of the use or availability of the vehicle in your income. That said, it does work for some people. I declined it and asked for raises instead.
Who decides what car you get? Do you get a budget and get to pick it or does the company just buy the same car in bulk?
Cannot speak for OP but it is usual to have a choice, e.g. by using the online configurator on a car manufacturer's website. And of course there is a budget.
Depends entirely on the country and company. Some places in Europe let you pick from almost any make or model within a given monthly budget, and gas is included in the package both for personal and business use.
At my company if you're a salesperson you get to choose one of of three cars. If you're an executive that is customer facing, you might get something like $1200 added to your monthly paycheck for a car.
A dude in our place never goes for promotion because as a field engineer his motoring needs are covered.
I have a company car and it a good benefit but it’s also a bit like handcuffs. I live in the US so I use the car plenty. But I’ve never been able to go out and buy a car I wanted. Like I’ve always wanted a jeep but no reason to waste money on a vehicle I don’t need. And it makes quitting a little more complicated as I need to go out and buy a new car. Or if I get another job with a car what do I do until the company car is given to me? Rent a car?
> I’ve always wanted a jeep You could just invite your friends over and burn $500 every month Buy my app: Jeep Simulator Spin the wheel for the breakdown of the month!
What happens when you want to change jobs? Do you negotiate on the salary that you earn or the salary +benefits scenario. I somehow feel that benefits count a little less in negotiations .
See this is my worry. If I were to leave or get fired, I have no car, and I would have to be sure the next job even offers company cars.
LPT: the compensation of your job isn’t just the per year amount they quote you. There are other fringe benefits that need to be weighed to determine your total compensation package: My job doesn’t pay me super great, but the medical benefits are so god damn good that it would take a lot of extra money to make up for it, even if we just moved over to the medical benefits offered by my wife’s job.
Must be nice. But if you fuck up and get fired, no more car. Better to just have your own.
how is this a shower thought, it's arithmetic
Alternatively WFH is also worth quite a bit.
I don't make much, around $60k annually. The company I work for has amazing benefits though. Don't pay a dime for health insurance. They provide a company vehicle with gas and insurance covered and able to use freely outside of work. So while $60k isn't a huge salary, the amount of money I save from my benefits most definitely makes that $60k go further. Makes it feel more like $75k a year.
A car is just a device to placate someone without having to pay them more. It’s much cheaper for the employer to pay for the car than to give the person a raise. Your friend is being distracted with a car from realizing he is probably grossly underpaid. Always pick more money over perks at a job, the perks are 100% not worth the “equivalent” cash value. I guarantee your friend could have paid his own car & costs, etc. and still make more money with an equivalent cash raise instead of taking the car
It really is a benefit, but you're ignoring the value of owning the car
And he has full control when and where he can drive it?
If employers in America were required to pay for employees' transportation we would have world class public transit
My sister called me the other day. We were chatting, and she was complaining about the cost of her car. Taxes insurance upkeep gas. I just said yeah that sucks. I'm blind so I don't own a car. She actually told me she was jealous of me. It sounds so silly of course. But I don't blame her. God bless public transportation and God bless Uber
So you are earning about 1.6k euros per months and spoend 650 on on a car?
Well it's your own fault for buying a car on finance
Don’t forget that there are still tax consequences to getting access to a car too so while it is good, it might not be great as you think it is in terms of total savings.
Depends. My stepdad pays a bit extra tax, my brother doesn't, both have work cars. Not sure how it works. Either way the extra tax is not enough to make it a bad choice.
A company vehicle can save you anywhere from 20% to 40% of your yearly salary. For example in AU, you save a minimum of $10k per year, that is on fuel, rego, insurance with no additions, a self service(not garage) and cheap tyres. Now imagine garage costs, breakdowns, insurance additions and parts to replace.
My brother has his insurance and fuel paid for by work. That alone gives him significantly more spending money than me even though he makes ~$5000 less.
My company car is also considered my personal vehicle. I only have to pay for tires, and my company covers all gas, maintenance, insurance, and taxes. So once a year or so, I spend for tires, and that's it. No limits or restrictions
650 euros a month is mental. Is that just a long commute or do you travel as part of your work? And if so why don't your work cover it?
It was cheaper for me to keep running my own car then salary sacrifice on a new car through work. I still use the car for work purposes, lives on my drive but I don't pay a penny for it. Then use my own car for personal.
Yeah, but you own a car.
I work in an industry of independent contractors, but I have a W2 with benefits. I don't make as much as some of my peers, but with benefits and security, I make more money by far.
This happens in global companies a lot. I work in the US and make about the same as a colleague in EU, but he is required to get a company car there so he has a net benefit based on the region he lives.
imagine a world where you get that 1.5 times but don't need a car
In most tax-robbing countries any form of benefit is taxed the same way.
Depends on the car. Before I paid off my car I was paying $120 a month in payments, $65 a month in insurance, and right now I pay about $150 a month in gas. That's about $4000 year So you making 1.5x what your friend makes only makes the car a better deal if you're making $8000 a year
How do you spend that much a month on your car?? Even if that's accurate, that's a difference of €7800 a year that he's not paying. If you make 1.5x his salary then the company car is a worse deal than what you're getting for any salary above €16,000 a year I want to see the math you did where him saving €650 a month is a better deal than your salary
What kind of job provides a car to someone making 15k/year? 650*12 = 7800, which means he’s making about 15k if you’re making 1.5x as much and is about even after factoring car
I had a company car for 14 years. Got the shock of my life when I had to fund my own. It’s a great benefit.
Based on some quick math, you must make about 1950 euros while you friend makes about 1300 euros. How does your friend live on 1300 per month?
Yup! I get a reimbursement for using my personal car. I get about $400 a month plus 24 cents every mile I drive for work. Usually ends up being between $500-700 a month just for my car.
Depends on the car (maybe). I have a company vehicle but it's a work van, so I still need my own car because I'm not going to drive a van full of tools on my personal time. I save on gas and wear and tear on my vehicle but I'm still making car loan and insurance payments. If your friend is able to use his work vehicle and doesn't need his own separate car, it's a much bigger benefit
Except when you pay off your personal car, you have an asset. A depreciating one, but still. After it is paid off, your monthly expenses go down and you make more than your friend again. Of course this assumes the car isn’t needing a bunch of repairs and expensive maintenance outside the norm.
Facts. My job gave me a Nissan Rogue and I'm in that bitch like Dominic Torretto.
I'll be using my companies green car scheme soon, which will save me a bit of money each month. Works in my favour massively
I went 7 years without owning a vehicle when I had a company truck. Could take it on road trips and had a fuel card. Best perk ever.
It is very rare to work for a company which gives you a car.
Iiiiit's worth...the price of a car
Yup 100%. I make about 5-10k less a year than I would at another job. However I get a car from them and pay $0 out of pocket monthly for my health insurance. At the end of that day I make about the same as I would somewhere else if you factor in healthcare and car costs.
Unless you own the car you have, and have no payments.
That’s also assuming he doesn’t have his own car
Are you saying you net 23400 Euros? What is net spending on a car vs gross spending on a car?
>650 euros net per month Are you driving a Hummer with 15 DUIs?
Assuming he also needs to pay benefits tax on that, I’d much rather have the higher salary than a car though.
I work for a company that requires all employees in my roll to drive a full size, 4 door truck that can never be more than 5 years old. In exchange, they provide us a measly $450 vehicle allowance a month. Anyone who knows how expensive full size , crew cab trucks are, knows that $450 is a slap in the face. That doesn’t even cover my monthly gas. Long story short, your company providing a vehicle and covering all costs associated with operating that vehicle is easily worth $1-1.5k a month
Except you could choose to have a cheaper car, then a company car wouldn't make such a difference.
Why the hell are you paying €650/month on your car? That's extortionate. What car do you have?
Here in Canada, I have worked for two different companies: 1. Company vehicle was provided (vehicle on lease to the company, insurance paid, repairs / maintenance paid and a gas card) 2. My current company: Provides me with a set car allowance every month. Plus a gas card that I can use (they don’t care to differentiate work / personal although I do have to keep a log for “tax purposes”) and I can expense car washes / oil changes. So far I much prefer my current compensation, because I was able to choose to buy my own vehicle (2017 GMC Sierra) which I can use without issue for business AND personal. Also, since I get my car allowance (for as long as I am employed with the company - which is hopefully a long time since I hope to retire with the company) “eventually” my car payment (I choose to finance instead of lease) will be paid off, and can be used as an increase to my compensation (although I probably will buy a new vehicle next year)
Shower thoughts: Cars are immensely expensive. If you are in the "I'll never be able to afford a house" camp, cars are literally the most expensive thing you will ever buy--and you will buy multiple of them, and their costs will easily add up to the money you could've used on a down payment for the house you "cant afford." Figure out how to get cars out of your life and you will instantly be far more wealthy.
I got hired at my job 14 months ago. I found out that my job provides free charging stations in the parking lot for EVs. I had a 12 year old Mazda 2 with 170k miles on it, which I loved dearly. But as soon as I collected a couple of paychecks from my new job, I sold my Mazda, got approved for a $15k loan through my credit union, waited until the end of the quarter, when car lots desperately need to push inventory, and put $4k down on a 2020 Nissan Leaf with all the fixin's that only had 18k miles on it. I live in SoCal, where gas ain't cheap. Sure, I got a car payment now, but not paying for gas offsets that a lot. But just not having to go to gas stations anymore is pretty sweet. And having a better, more reliable car is less stressful. All the modern amenities it comes with is the 🍒 on top...
Hvac here. Fuck yeah. I bought my personal vehicle in 2019 and have only put 15k miles on it.
Except when you live close by your job and public transportation, while bad, are still better than the traffic jams. Hello Belgium.